Focusing Up: CNET - A Stock To Watch
By Steve Poland • December 20, 2007
I use to dabble in stocks in the dot-com days and before then, roughly 1996. It was the summer before my Senior year in high school and I was in the shape of my life, because I’d wake up at 5:30am, go to the gym to work-out, come home to watch CNBC and eat some cereal — CNBC in the morning use to get me juiced. I told my Dad to be investing in Intel and Yahoo back then — and he made a killing over those years.
Since then, and since the dot-com days when I turned $3k into $12.5k, then played all of that on margin ($25k total), and then the bubble burst and I received an end check of $0.11 (which I still have to this day as a scar reminder) — I haven’t done any investing in the market. In fact, when I tell my friends various stocks to look at (MIVA - I thought it was a good acquisition target) — they typically go down; ditto on my sports picks. You can pretty much bet against whatever I say in regards to stocks and sports.
But I have to put one out there — CNET. I haven’t looked at their income statement or balance sheet, and I don’t even know who is running that place right now (it’s Neil Ashe) — but whoever it is, they seem to be doing a great job “trimming the fat”. Their founder/CEO resigned a year ago and all the trimming has been happening since then. The past few months they have really tightened down to sell-off assets that aren’t part of their core. They sold Webshots and now just closed shop on their RSS reader product. They also recently secured a $250mm credit line.
They seem to be really working on FOCUSING. Focus is such a difficult thing to do — particularly as a young startup when you’re trying to get your feet on some steady ground (aka generating revenue and doing whatever it takes to do to accomplish that) or as a big public company when investors want to see increased returns. According to comScore, CNET’s News.com has dropped from 11mm monthly pageviews to 6mm monthly pageviews in the past year alone (although pageviews is a misleading metric in this AJAX world — I should focus on unique visitors and time spent).
Look for CNET to sell/close other assets like AllYouCanUpload (photo upload site), Consumating (dating site for geeks; ah hem Digg? er, this post is about focusing, digg doesn’t need a dating site), etc.
I digress — back to their stock, is it a buy or a sell? I like this simple ‘Ratings‘ feature by TheStreet.com — it looks at financial metrics, what analysts are saying, etc., and gives a rating from A to F (like grades in school). CNET is a sell with a ‘D+’ rating. I didn’t look at that before writing this post, but as you can see — I’m not the best with picking winners in the market. I’m the same with betting on horses — I go for the risky 80:1 bets, because if they pay-off, they pay-off BIG. But that’s me, a risky entrepreneur.
The real question is: What does the brand CNET mean to you? It means news and reviews to me — whether it’s video games or tech news. But that brand image has been diluting over the years.
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The patent-pending (not really) NetNagel Stock Index rates CNET at 4.21. Don’t buy.
It’s not fool-proof, but it’s given me 18% per year returns, on average.