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TheStreet Posts Loss, Rise in Sales

TheStreet, publisher of this Web site, reports a loss of 6 cents a share as revenue from ongoing businesses rose 8%.

NEW YORK (

TheStreet

) --

TheStreet

(TSCM)

, the financial media group that publishes this Web site, posted a loss in the third quarter as investments to expand the business offset increases in revenue from both advertising and subscriptions.

For the period ended Sept. 30, TheStreet posted a net loss attributable to common shareholders of $1.93 million, or 6 cents a share, compared with a year-earlier loss of $1.39 million, or 5 cents a share.

Excluding business units that the company sold, EBITDA (earnings before interest, taxes, depreciation and amortization) came to a loss of $290,335. Total revenue from ongoing businesses improved 8% to $14.3 million in the quarter, reflecting a 9% jump in advertising sales and 8% growth in subscription revenue.

"We are particularly pleased to see year-over-year advertising growth during a quarter in which many of our brokerage clients have reported that overall trading activity has declined substantially and their business has slowed," Chief Executive Daryl Otte said in a press release, adding that TheStreet's subscription services business recorded its highest revenue in nine quarters.

Otte said the third-quarter loss reflects "the seasonal nature of our advertising business" and previously announced investments that consist mainly of costs for new staff in the sales, marketing and editorial departments -- hires that "helped to drive additional traffic to our ad-supported sites as well as develop new subscription products."

Operating expenses for TheStreet's ongoing businesses were $16.4 million in the quarter, a 12% increase from the year-earlier period. Spending was higher than normal in the recent quarter as the company renovated its headquarters in New York City and worked toward upgrading its technical infrastructure and content management systems.

When costs related to divested units are included in the comparisons, operating expenses actually decreased 2% year over year. The results from TheStreet's ongoing businesses exclude the company's 2009 shedding of its unprofitable marketing unit, Promotions.com, where accounting issues had forced it to

restate financial results

for 2008; revenue derived from the global research legal settlement that expired in July of last year; and revenue from the banking and insurance ratings business divested in May.

Developments in the quarter included:

* The launch of a

mobile-web version of TheStreet's flagship Web site

.

* Content-sharing agreements with

Newsweek

,

GigaOM

TheStreet Recommends

and PBS'

Nightly Business Report

.

*

Thomas Etergino's

appointment as chief financial officer.

* Nielsen Netratings ranking of TheStreet as No. 1 across several of its metrics, including concentration of users with household income above $150,000 and of users who own securities.

* Advertising revenue increased 9% to $4.7 million compared with the third quarter of last year.

*Premium services for ongoing businesses increased 8% to $9.6 million in the third quarter, primarily a result of a 9% jump in the company's subscriber base, offset partially by a 3% decline in average revenue per subscriber.

Otte said the so-called market "Flash Crash" of May 6 -- which evidently caused some retail investors to abandon the equities markets -- and greater focus on the sale of monthly subscriptions contributed to a 14% sequential decline in subscription bookings in the third quarter compared with the second quarter. However, the churn rate -- the percentage of a Web site's paying audience that cancels subscriptions over a certain period -- improved slightly on a sequential basis. TheStreet's churn rate was flat in the second quarter after falling to 3.8% in the first three months of the year.

TheStreet finished the third quarter with cash and cash equivalents, restricted cash and marketable securities of $79.7 million, 3.5% less than it had at the end of the prior quarter. The decrease was attributed to capital expenditures of $2.9 million and the payment of $900,000 in dividends, offset partially by the receipt of $900,000 related to the divestiture of a former subsidiary.

-- Written by Miriam Marcus Reimer in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.