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iVillage: Bargain Or Bottom-Feeder?

Like a former beauty queen who hasn't yet been asked to the prom, iVillage (IVIL) and its early investors still hope for an invitation to join the latest Internet stocks run-up.

But the women's Web site network, which set investors' hearts afire with a dazzling IPO earlier this year, continues to wait by the phone.

While dozens of other Internet companies have seen their stock prices soar in recent months, shares of IVIL have been mired in the mid-$20 per share range for months, a far cry from their first-day closing price of $80 1/8 on March 19.

Now iVillage is hoping to rekindle the passion of 'Net investors with a $40 million advertising campaign designed to convert thousands of women who received new computers and Internet connections into subscribers.

The company plans to begin airing new television commercials on Monday, after having held off on promotional efforts during the shopping season.

iVillage's decision to avoid getting lost in the holiday clutter may be defensible, but it came at a cost. The company's main competitor, Women.com Networks, has pulled into a virtual dead heat with iVillage in traffic to its various sites.

Further, by taking a pass on holiday advertising, iVillage missed out on a chance to build its e-commerce revenue beyond its current 25% level.

Granted, iVillage bills itself as ad-supported community site where women can discuss work-related, health and personal issues, but many other consumer-oriented content sites are aggressively trying to broaden their revenue base beyond advertising and sponsorships.

What iVillage really needs to do to win back skeptical investors is show tangible progress toward profitability, and on that score the company still has a long way to go.

Though Q3 revenue more than doubled -- reaching $10.7 million, up from last year's $4.3 million -- so too did net losses. iVillage posted a Q3 net loss of $28.4 million, compared to $12.2 million in last year's third quarter.

That recent net loss of $1.12 per share beat consensus expectations of $1.39 per share. Still, it appears investors expect more before giving their hearts back to iVillage.



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