handily beat analysts' expectations Wednesday by announcing first-quarter earnings of 2 cents per share, excluding certain costs including goodwill amortization, merger costs and net losses on investment sales. The consensus estimate of analysts polled by
was for a loss of 6 cents a share. The San Francisco-based global media company hadn't expected to generate an operating profit until the fourth quarter of 2000.
"This is very positive. I wasn't looking for break-even until the fourth quarter," said Matthew Finick, an analyst with
Thomas Weisel Partners
who rates the stock a buy. Thomas Weisel has not done any underwriting for CNet.
CNet, which has $300 million in cash on hand, also announced Wednesday that its board of directors had authorized a stock repurchase plan of up to $100 million of its common stock. Closing today at 31 1/2, CNet's stock is 60% off its 52-week high of 79 7/8. The stock is down 41% in the last month alone.
The company warned that the share repurchase plan could cause the
acquisition to be accounted for as a purchase rather than as a more earnings-friendly pooling of interests. If CNet has to use purchase accounting, it would incur a hefty amortization expense that would eat into future earnings.
Net revenue increased 126% to $45.4 million from $20.1 million in the first quarter of 1999. The company attributed the record revenue to strong gains in online traffic. CNet averaged 16.5 million daily page views in the quarter, up from 14 million in the fourth quarter of 1999. In addition, the network generated 218,000 leads per day to CNet's partner merchants. For the year, CNet expects net revenue to exceed $200 million.
Including goodwill amortization, merger costs, net losses on investments, stock-based compensation and related taxes, CNet Networks' net loss for the quarter was $19.5 million, or 23 cents per share.
Earlier this month, CNet launched China.CNet.com, part of a $13 million joint venture with newly public Asiacontent.com
. The joint venture already operates several CNET sites in Asia, as well as one in Australia, and plans to launch a site in India later this year.
In February, CNet acquired MySimon, an online comparative shopping service, for 11.1 million shares in an all-stock deal. With CNet's stock then trading in the mid-60s, the deal valued MySimon at over $700 million.
Also in the quarter, CNet Networks launched CNet Radio, an all-technology radio program that currently airs only in San Francisco, but which the company expects to roll out nationally by the end of the year. CNet Radio is a partnership with AMFM
, the nation's largest radio broadcaster.