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.