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TheStreet Open House

Valassis Communications Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: VCI

Robert A. Mason

Britney, thank you very much. Good morning, everyone. I'd like to thank you for joining us for our second quarter 2012 earnings call. With me this morning is Bob Recchia, our Chief Financial Officer. We're also joined by Jim Parkinson, our Chief Digital and Technology Officer. Jim has responsibility for the development and execution of our digital media strategies. And after some prepared remarks, Bob, Jim and I look forward to answering your questions.

So I look back at Q2, I believe it was a quarter defined by our leadership team's proactive steps to position our company for the future. Before I talk about our business segment performance for the quarter, I'd like to spend a few minutes talking about the actions we've taken in 3 very important areas.

First, we've increased our investment in our Digital business. The biggest news in this quarter was our $18 million acquisition of Brand.net. With this acquisition, we have taken advantage of a unique opportunity to acquire a talented team and a technology platform that will accelerate the growth of our Digital business.

This acquisition of Brand.net strengthens our ability to provide optimized media solutions across both print and digital channels by capturing a greater share of our clients' growing online budgets.

In the back half of 2012, we expect that Brand.net will represent around $12 million of incremental digital revenue, increasing our annual digital revenue target to approximately $42 million.

In an effort to fully leverage this asset and further accelerate the growth of our Digital business, we're investing in additional sales resources, product development and an experienced management team. Given this investment, we are projecting we will incur approximately $7 million in operating losses in the back half of 2012, resulting in an overall annual loss of approximately $14 million from digital operations.

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