No question, the content on Salon.com
is great. I often read it. But does that make it a
good business? So far, the answer is “no.” Anyway, that is what
shareholders are saying.
The company had a small IPO in June 1999, with an offering price of $10.50.
In all, the company raised $26 million. Now, the stock trades at a lowly
$1-5/16.
But Salon.com could provide some upside. After all, the company has been
making critical changes. For example, there have been key hires, such as
Steve Reed as the Senior VP of Media Sales. He is a veteran of the radio
industry, working at AM/FM Inc., where he was responsible for ramping-up
sponsorship revenues.
There was also the hire of Roger O’Callahan as CFO. He was the CFO at
Consan and was a technology industry analyst for Dain Bosworth (now Dain
Rauscher Wessels).
Salon.com has been tough on the cost structure, as well. Recently, 13
employees were fired and the Seattle office was shut down (should cut
operating costs by 20%). There will also be reductions in marketing
expenses.
Despite the cutbacks, the company is still generating new business. There
was a recent deal with Earthlink Networks, the second largest Internet
Service Provider. Salon.com content will be part of the Earthlink Personal
Start Page.
Of course, Salon.com has a small revenue base. In the past quarter,
revenues were $2.6 million, which was up 201% from the same time last year.
Losses were $5.2 million.
The company has done a great job of getting eyeballs. In March, there were
3.7 million unique users, which was a 208 percent increase from March 1999.
As for page views, these increased 454 percent during the same period to 72
million (on a monthly basis).
When the stock price was higher, Salon.com made a variety of acquisitions.
There was MP3Lit.com, which offers audio literature using the MP3 format.
But the fate of Salon.com will probably be similar to the fate of
ZDNet , which was
purchased
by CNET . Basically, it
will be difficult for Salon.com to continue as an independent entity.
Rather, it would make a good addition to a bigger media property. And the
price tag is not bad. The market capitalization is about $18 million.
