Is JupiterMedia a Cheap Domain Play?
Years ago JupiterMedia owned Search Engine Watch and Search Engine Strategies, but sold them off (along with ClickZ) for $43 million to raise funds to binge on buying stock image companies. Why? According to Alan Meckler, JupiterMedia's CEO:
Why the sale? The simple reason is that Jupitermedia has evolved from being a media company with images into an Image company with media. A good part of the evolution came from the acquisition of 7 image companies since June 2003. Over a 25 month period we have spent close to $200 million making the above referenced acquisitions along with dozens of photo library collections. Most of these deals were done with cash. The cash came from our treasury and from bank borrowings. We plan to make more acquisitions and we plan to continue using cash. So how do we get more cash? Simple, we either go to the public market and offer our stock for cash or we sell assets such as the Search Engine trade shows and ClickZ network in order to raise more funds for acquisitions.
Recently I would have been prone to go to the public market and sell equity to raise cash. But even with our stock closing price yesterday of $22.80, I think Jupitermedia was undervalued based on what I believe the company will be worth over the coming years. So I chose asset sales and additional borrowing based on the fact that I think Jupitermedia should be more valuable tomorrow.
After spending a couple hundred million dollars buying image companies, JupiterMedia built up too much debt to service in this credit crisis and was forced to sell off their images division to Getty for $96 million - up to $40 to $45 million less than they were offered in August.
That image sale should allow JupiterMedia to pay off all their debts, but the company is off about 99% from when they were "under-priced." They are trading at 27 cents a share, and have a market value under $10 million. They own a ton of great domains like Internet.com, InternetNews.com, Javascript.com, Developer.com, WebDeveloper.com, Jumbo.com, MediaBistro.com, and dozens of other valuable domain names and websites.
Will they start selling themselves off in chunks? Will a private equity investor try to take them private? Or will they go to $0?
* As a disclaimer, I bought a few thousand shares recently...though it was a bet more than an investment with conviction.
Comments
At 27 cents per share, that sounds like a safe bet...
Maybe you should offer some advisory services to help them turn around...legally, there's no reason why you couldn't do it, and with a few thousand shares in your pocket, there's certainly an incentive to get involved...
Your financial advisor,
Ben McKay
details here -->
http://www.nypost.com/seven/02212007/business/getty_is_eyeing_net_rival_...
they essentially sold the image business for nothing (as it was just enough to pay off the debt).
the company may seem cheap at 25 cents but it is not growing, it's media business has been shrinking and displaying no organic growth....it's doubtful it will go to zero and you may make some money if it goes to $1 but it's not a good place to put your money - you should also pay close attention to the preferred shares that will take all the cash in the event of an acquisition
my previous post subject did not appear, it was supposed to say that the previous Getty offer was over $400 million more, not $45 million more....please fact check a little better....thanks
I did more research than what was shown in the above post. My point was that the $45 million loss was over 2 months. The prior deal was one they were talking through that Getty eventually broke off...the extra $45 million was guaranteed...all Alan Meckler needed to do was sign the exclusive contract.
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