CNET Joins With Yahoo on Content, Ads
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CNET Networks (NASDAQ: CNET), fighting dissident shareholders who want to expand the board, posted a narrower first-quarter loss on Thursday and announced a partnership with Yahoo (NASDAQ: YHOO) to provide content to Yahoo sites and cross-sell advertising.
The venture, set to launch in the third quarter, would bring CNET about $100 million in revenue over the next three year, CNET CEO Neil Ashe said on a conference call.
CNET shares rose 3.2 percent to $7.75 in extended trade, after closing Thursday's session down 1.8 percent at $7.51.
The three-year strategic partnership with Yahoo comes as San Francisco-based CNET, best known for its technology news and reviews, faces pressure from an investor group led by hedge fund Jana Partners to transform itself into a "Web 2.0 company."
Earlier this month, the Jana group released a proposal outlining measures CNET should take to stem a decline in its stock price and compete with rivals like Yahoo, which have a stronger online advertising presence.
The Jana group, which wants to expand CNET's board by five members and replace two existing directors, has also suggested linking up with a popular online advertising platform such as Google's (NASDAQ: GOOG) DoubleClick.
Under the deal announced on Thursday, CNET's technology news and consumer electronics reviews will be available on Yahoo Web sites.
Yahoo will also be able to sell display advertisements on CNET properties such as News.com and TV.com, while CNET will sell advertising alongside the content provided on Yahoo sites.
Net Loss, Revenue Forecast
CNET reported a net loss of $6.1 million, or 4 cents per share, compared with a net loss of $9.1 million, or 6 cents per share, in the year-ago period.
Although CNET's per-share loss was in line with Wall Street estimates, its net revenue of $91.4 million fell short of analysts' average expectation for $93.4 million, according to Reuters Estimates.
Revenue grew 3 percent from the previous year's quarter, as the number of monthly unique users of CNET properties grew to 161 million.
CNET forecast revenue of $100 million to $104 million for the second quarter and earnings per share of zero cents.
Wall Street analysts are expecting CNET to earn $103.3 million in revenue in the second quarter and 1 cent per share in earnings.
For full year 2008, CNET expects to earn between $440 million and $460 million in revenue, and earnings per share of between 3 cents and 4 cents.
CNET Chief Financial Officer Zander Lurie told the conference call that this forecast includes revenue the company expects from the Yahoo deal, which addresses a major revenue need for the company.