CEO Neil Ashe laid it out right at the beginning: A response to Jana’s white paper is forthcoming, but the issue will not be discussed on today’s call. After touting the company’s successes in the quarter: “our financial performance did not mirror our traffic growth.” Revenue, he acknowledged, came in at the low end of the range.
– Yahoo (NSDQ: YHOO) partnership: Ashe explained: they’re essentially creating the largest tech ad network, and the company expects the partnership to yield $100 million of added revenue growth over the next three years. Later, Ashe was asked whether there were provisions related to a potential change-in-control (ie Microosft buys Yahoo), but he offered no details, other than to say the possibility was taken into account. Lurie: “We are giving Yahoo a good chunk of inventory seasonally in ways that let us optimize yields.. our properties will be used sold through vertical channels.”
– Paid listings: CFO Zander Lurie identified macro weakness for a decline in paid listings revenue.
– Q&A: A lot of emphasis on the Yahoo deal as you might expect, also on Google (NSDQ: GOOG) and search.
Guarantees: Lurie: The Yahoo deal is set to scale in years two and three. CNET (NSDQ: CNET) has significant guarantees from Yahoo … $100 million or so is our prudent guess of what the total value will be over three years.” As for the content, “we are ultimately being fairly compensated for the distribution of our content via Yahoo, (which Yahoo reminded us of often during the negotiations).”
Google: CNET retains its relationship with Google was a 12 percent revenue partner this quarter.
Economics weakness: Don’t look at WebMD’s (NSDQ: WBMD) lower nunbers for guidance since CNET doesn’t have a lot of pharma advertising. CEO Neil Ashe and CFO Zander Lurie were frank about Q1 being lot but suggested had more to do with issues like the writers strike and that they see improvement next quarter.