We recently covered Lucent Using RSS for imporving internal processes. News.com reports, TheStreet.com, a financial news and commentary Web site, said it has hired investment bank Allen & Co. to assist its board in considering strategic options. Some investors have speculated that New York-based TheStreet.com may be up for sale since last year and amid various other media deals, including Dow Jones's recent purchase of MarketWatch.
David Jackson of The Internet Stockblog looks at this annoucement quite perceptibly and has published an excellent brief about the development. Excerpts with edits:
The street.com is taking more time to sell than CBS marketwatch due to:
- First, TheStreet.com isn't making money.
- Second, potential acquirers could view the stock as expensive: the stock trading at a forward P/E of over 31.
- Third, The Street.com's research and brokerage business for institutional investors likely makes it a less attractive acquisition target for pure media companies.
- Fourth, TheStreet.com's brand seems to be overly dependent on founder James Cramer.
- Fifth, the company lost at least one high-profile contributor and revenue generator - Herb Greenberg - to CBS MarketWatch during 2004.
- Sixth, TheStreet.com doesn't seem to be a very attractive bet on the growing Internet advertising market, since it generated only 30% from advertising as compared to subscriptionsin Q3 .
Two more ( well thought out)observations:
- Opens opportunity for independent firms to re-think the traditional research business and to provide research to hedge funds.
- The proliferation of small, targeted Web sites and the rise of RSS pose a risk to firms like TheStreet.com and Yahoo! that aim at broad news coverage and analysis. David's analysis looks excellent - Please visit his site for reading the full article and the complete analysis