CNET Networks (NASDAQ: CNET) is an online media company with a wide variety of offerings. The company's primary websites include CNET.com, Download.com, Webshots, TV.com, and GameSpot.com. Basically, CNET makes money from advertising, content licensing, paid subscriptions, etc. It reported a quarter last week that managed to disappoint Wall Street for several reasons, including missing consensus for most figures and cutting estimates.
While I certainly can understand the bullish arguments behind the stock, mostly the fact the company stands to benefit from a secular growth trend in online advertising in coming quarters, I think the stock is dead money. I believe many of CNET's offerings are very at-risk due to the growing saturation of blogs and larger competitors in the news-breaking and technology review businesses, Webshots has a dim future, and capex increases are a very possible reality in coming quarters in order to scale the business.
The growth in blogs over the last several years has certainly hurt CNET's reviewing and news-breaking segments, primarily CNET.com. For example, TechCrunch.com has become extremely popular for breaking exclusive technology news, a space once completely dominated by CNET. While the company is certainly trying to break into the blog space, I agree with Doug McIntyre's take about a month ago -- its doing too little, too late.
While I certainly can understand the bullish arguments behind the stock, mostly the fact the company stands to benefit from a secular growth trend in online advertising in coming quarters, I think the stock is dead money. I believe many of CNET's offerings are very at-risk due to the growing saturation of blogs and larger competitors in the news-breaking and technology review businesses, Webshots has a dim future, and capex increases are a very possible reality in coming quarters in order to scale the business.
The growth in blogs over the last several years has certainly hurt CNET's reviewing and news-breaking segments, primarily CNET.com. For example, TechCrunch.com has become extremely popular for breaking exclusive technology news, a space once completely dominated by CNET. While the company is certainly trying to break into the blog space, I agree with Doug McIntyre's take about a month ago -- its doing too little, too late.
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