CNET Networks Reports First Quarter 2005 Financial Results.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. Networks, Inc. (Nasdaq:CNET) --Company Posts Total Revenue of $74.7 Million --Interactive Revenue up 23% --Monthly Unique Users up 38% and Average Daily Page Views up 114% CNET Networks, Inc. (Nasdaq:CNET) today reported results for the first quarter ended March 31, 2005. "We are starting 2005 with strong growth across the board," said Shelby Shelby, city (1990 pop. 14,669), seat of Cleveland co., W N.C., in a fertile piedmont farming (cotton, grain, soybeans, livestock) area; inc. 1843. There is dairy processing, and plastic and metal products, uphostered furniture, textiles and apparel, and chemicals Bonnie bon·ny also bon·nie adj. bon·ni·er, bon·ni·est Scots 1. Physically attractive or appealing; pretty. 2. Excellent. , chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of CNET Networks. "The continued growth and expansion across our brands, audience, and customer base helped drive strong results during the first quarter. The leverage in our model is becoming more apparent as evidenced by the continued top-line strength and improved profit margins, underscoring CNET Networks' ability to achieve long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , sustainable growth." --Total revenues for the first quarter totaled $74.7 million, an 18 percent increase compared to revenues of $63.4 million for the same period of 2004. --Interactive revenue increased 23 percent to $68.5 million in the first quarter versus $55.5 million in the same period in 2004. --Operating income equaled $413,000 during the first quarter of 2005 compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $5.7 million in the first quarter of 2004. --Operating income before depreciation and amortization was $6.5 million, a 168 percent increase compared to $2.4 million during the first quarter of 2004. --The profit margin of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation and amortization increased to 9 percent, from 4 percent during the first quarter of 2004. --Net income for the first quarter of 2005 was $383,000, or $0.00 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which includes a gain on the sale of an investment. This compares with net income of $2.9 million, or $0.02 per diluted share, for the same period of 2004. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.04 of net income per share for the first quarter of 2004 was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a net gain from unusual items. Business Review "We are seeing strong momentum across our brands, which cover some of the most important content categories on the Web. The market for online advertising continues to strengthen, and so does our confidence in the interactive content category. We are focused on continuing to increase our exposure to this opportunity," said Bonnie. --CNET Networks' global network of Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the properties reached an average of 105.9 million unique monthly users during the first quarter of 2005(1), an increase of 38 percent from the first quarter of 2004. Average daily page views increased to 94.7 million during the first quarter(1), up 114 percent from the year-ago quarter. --CNET Networks continued to progress in its efforts to expand its customer base and add new advertiser ad·ver·tise v. ad·ver·tised, ad·ver·tis·ing, ad·ver·tis·es v.tr. 1. To make public announcement of, especially to proclaim the qualities or advantages of (a product or business) so as to increase segments across the network. With a growing audience and high quality demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. that are of importance to brand marketers, CNET Networks was able to extend its customer roster network-wide. For example, during the quarter, properties such as CNET.com, CNET News.com, and Webshots This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since September 2007. .com added several new advertisers, such as Delta Airlines, General Motors, and Visa. The company also continued to attract a more diversified diversified (di·verˑ·s advertiser base to its games and entertainment properties, including customers such as Pepsi, Honda honda a quick release metal eyelet for the end of a lariat. When the restrained animal is no longer required it is not necessary to slacken off the loop and pull it over the head—a very great advantage when working with wild cattle or unbroken horses. , and McDonald's McDonald’s fast-food restaurant chain throughout the world; recognized by golden arches. [Am. Culture: Misc.] See : Ubiquity , who are interested in reaching the coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. 18- to 34-year-old male audience demographic See demographics. on properties such as GameSpot GameSpot video gaming website that provides news, reviews, previews, downloads, and other information. The site was launched in May 1996 by Pete Deemer, Vince Broady, and Jon Epstein. and MP3.com. The company has also made several product enhancements across the network that will help further its efforts to attract a broader customer segment. These product expansion efforts include:
-- As auto manufacturers show increasing interest in online
advertising, CNET Networks will be expanding its content
coverage on CNET.com this year with editorial and features
related to the auto technology category. As advanced
technology features in automobiles become more pervasive,
CNET.com will broaden its editorial coverage in the auto
technology category. CNET.com stepped up its auto coverage
significantly during the Consumer Electronics Show in
January, when its editors extensively covered the many
technologies that matter for both auto and technology
enthusiasts alike, as well as covering the latest trends
at auto shows in Detroit, Chicago, and New York.
-- This month, CNET Networks announced the launch of its BNET
Web site (www.bnet.com), the latest addition to the
company's portfolio of business-to-business properties.
BNET, a comprehensive, high-quality source of business
thought leadership, is designed to help business leaders
get smart about what's working at work by finding the
quality knowledge resources they need, regardless of their
job function or industry. Since its soft launch a year
ago, BNET has already contributed to CNET Networks' goal
of expanding its content offerings and attracting a
broader audience and new customer segments. It has amassed
nearly 50,000 high-quality whitepapers, case studies,
Webcasts, and audiocasts; attracted more than 200,000
registered users; and secured several advertising sponsors
in new categories, including executive education, business
education and management consulting firms.
--This month, CNET Networks announced that it acquired HeyPix! (www.heypix.com), which will enable it to deliver advanced photo management, social networking See social networking site. social networking - social network , and blogging Writing Weblogs. See blog. capabilities to the Webshots audience (www.webshots.com). CNET Networks entered the photo sharing Photo sharing is the publishing or transfer of a user's digital photos online, thus enabling the user to share them with others (whether publicly or privately). This functionality is provided through both websites and applications that facilitate the upload and display of images. category last summer with its acquisition of Webshots, the leading photo sharing Web site, and through the HeyPix transaction, plans to extend its position with the addition of cutting-edge features and services. Webshots maintained its leadership position in the online photography category (ranked number one according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Nielsen//NetRatings) during the first quarter and continues to reach record numbers across many important metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. . For example, more than 750,000 photos are uploaded daily, and its photo library grew by 66 million photos in the first quarter of 2005 alone, for a total of 175 million publicly and privately shared photos at the end of the quarter. --Last week, CNET Networks announced further plans to expand its online presence and personal technology content in China. The company entered into a definitive agreement to acquire the assets of PCHome (www.pchome.net), in cooperation with Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. subsidiaries and affiliates, for a total of $11 million in cash payments, with $5 million due at closing and the remaining $6 million due in the fourth quarter of 2005. PCHome is a leading personal technology and commerce Web site serving all of China with headquarters in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. . In related moves last year, CNET Networks acquired ZOL ZOL ZAMBEZIA on Line and Fengniao, two leading personal technology Web sites based in Beijing Beijing (bā-jĭng) or Peking (pē-kĭng, pā–), city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People's Republic of China. It is in central Hebei prov. . Combined, these acquisitions position CNET Networks as a leading provider of personal technology content in two of the largest and fastest growing markets in China, significantly extending its online audience reach there. With minimal audience duplication duplication /du·pli·ca·tion/ (doo-pli-ka´shun) 1. the act or process of doubling, or the state of being doubled. 2. , PCHome adds a user base that is comparable to that of ZOL and Fengniao combined. Business Outlook For the second quarter of 2005, management anticipates total revenues of $81 million to $85 million. Interactive revenues are expected to be in the range of $75 million to $78 million, and publishing revenues are expected to be between $6 million and $7 million. Management estimates operating income between $4.3 and $6.3 million during the second quarter, and operating income before depreciation and amortization of between $11.5 million and $13.5 million for the quarter. Earnings per share is expected to be in the range of $0.02 and $0.03 during the second quarter. For the full-year 2005, management is estimating total revenues will be in the range of $345 million and $355 million. Management expects Interactive revenue to be in the range of $315 million to $323 million, and publishing revenues are expected to be between $30 million and $32 million. Management estimates operating income between $34 million and $39 million during 2005, and operating income before depreciation and amortization is expected to be between $64 million and $69 million. Earnings per share is expected to be in the range of $0.20 and $0.23 for the year ended December December: see month. 31, 2005. More detailed guidance, as well as a table that reconciles operating income (loss) before depreciation and amortization guidance to operating income (loss) guidance can be found on the "Guidance to the Investment Community" sheet that accompanies this press release. Conference Call and Webcast CNET Networks will host a conference call to discuss its first quarter 2005 financial results and business outlook beginning at 5:00 p.m. ET (2:00 p.m. PT), today, April 25, 2005. To listen to the discussion, please visit http://ir.cnetnetworks.com and click on the link provided for the webcast conference call or dial (800) 344-1035 (international dial-in: (706) 679-3076). A replay of the conference call will be available through May 9, 2005 via webcast at the URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. listed above or by calling (800) 642-1687 (international dial-in: (706) 645-9291) and entering the conference ID number 5455436. The company's past financial news releases, related financial and operating information, and access to all Securities and Exchange Commission filings, can also be accessed at http://ir.cnetnetworks.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This press release and its attachments include forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information and statements that are subject to risks and uncertainties that could cause actual results to differ materially. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. include the statements under the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Business Outlook," which sets forth our estimated financial performance for the second quarter and full year of 2005, and statements regarding our growth prospects and expectations regarding the future success of our products and services. In addition, management expects to provide forward-looking information statements on the conference call to be held shortly following the issuance of this release, which are also subject to risks and uncertainties that could cause actual results to differ materially. The forward-looking statements in this release and on the conference call are identified by the words "expect," "estimate," "target," "believe," "goal," "anticipate," "intend" and similar expressions or are otherwise identified in the context in which they are made as being forward-looking. These statements are only effective as of the date of this release and we undertake no duty to publicly update these forward-looking statements, whether as a result of new information, future developments or otherwise. The risks and uncertainties that could cause actual results to differ materially from those projected include: a lack of growth or a decrease in marketing spending on the Internet due to failure of marketers to adopt the Internet as an advertising medium at the rate that we currently anticipate; a lack of growth or decrease in marketing spending on CNET Networks' properties in particular, which could be prompted by competition from other media outlets, both on and off the Internet, dissatisfaction with CNET Networks' services, or economic difficulties in our clients' businesses, as evidenced in previous periods by many of our enterprise technology customers; economic conditions such as weakness in corporate or consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , which could prompt a reduction in overall advertising expenditures or expenditures specifically on our properties; the failure of existing advertisers to meet or renew their advertising commitments as we anticipate, which would cause us to not to meet our financial projections; the failure to attract advertisers outside of our traditional technology and consumer electronics categories, which would cause us to not meet our financial projections; a continued decline in revenues from our print publications as advertising dollars shift to other media; the acquisition of businesses or the launch of new lines of business, which could decrease our cash position, increase operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , and dilute di·lute v. To reduce a solution or mixture in concentration, quality, strength, or purity, as by adding water. adj. Thinned or weakened by diluting. operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; an increase in intellectual property licensing fees, which could increase operating expense, including amortization; the risk of future impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of our intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , goodwill or investments based on a decline in our business or investments; and general risks associated with our business. For risks about CNET Networks' business, see its Annual Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 and subsequent Forms 10-Q and 8-K, including disclosures under the captions "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Conditions and Results of Operations," which are filed with the Securities and Exchange Commission and are available on the SEC's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . About CNET Networks, Inc. CNET Networks, Inc. is a worldwide media company and creator Creator may refer to:
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .(1) CNET Networks January January: see month. - March 2005 (internal log data)
Consolidated Statements of Operations
Unaudited
(in thousands, except share and per share data)
Three Months Ended
March 31,
------------ ------------
2005 2004
------------ ------------
Revenues
Interactive $ 68,505 $ 55,505
Publishing 6,207 7,892
------------ ------------
Total revenues 74,712 63,397
Operating expenses:
Cost of revenues 38,680 33,850
Sales and marketing 18,805 18,234
General and administrative 10,764 8,903
Depreciation 3,915 7,171
Amortization of intangible assets 2,135 900
------------ ------------
Total operating expenses 74,299 69,058
Operating income (loss) 413 (5,661)
Non-operating income (expense):
Realized gains on investments, net of
impairments 568 8,032
Interest income 363 482
Interest expense (780) (1,678)
Other (85) 1,832
------------ ------------
Total non-operating income
(expense) 66 8,668
------------ ------------
Income (loss) before income taxes 479 3,007
Income tax expense 96 79
------------ ------------
Net income (loss) $ 383 $ 2,928
============ ============
Basic net income (loss) per share $ 0.00 $ 0.02
============ ============
Diluted net income (loss) per share $ 0.00 $ 0.02
============ ============
Shares used in calculating basic net
income (loss) per share 144,847,388 142,627,445
Shares used in calculating diluted net
income (loss) per share 151,392,920 150,074,641
Consolidated Balance Sheets
Unaudited
(in thousands, except share data)
March 31, December 31,
2005 2004
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 34,914 $ 29,560
Investments in marketable debt
securities 25,212 22,193
Accounts receivable, net 59,963 66,712
Other current assets 16,252 15,155
----------- -----------
Total current assets 136,341 133,620
Restricted cash 19,774 19,774
Investments in marketable debt securities 17,084 22,199
Property and equipment, net 50,480 48,989
Other assets 20,292 21,722
Intangible assets, net 33,386 34,756
Goodwill 131,350 126,287
----------- -----------
Total assets $ 408,707 $ 407,347
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,073 $ 6,903
Line of credit 5,000 5,000
Accrued liabilities 58,543 61,992
Current portion of long-term debt 3,845 4,007
----------- -----------
Total current liabilities 74,461 77,902
Non-current liabilities:
Long-term debt 137,614 135,614
Other liabilities 106 252
----------- -----------
Total liabilities 212,181 213,768
Stockholders' equity:
Common stock; $0.0001 par value;
400,000,000 shares authorized;
145,158,348 outstanding at
March 31, 2005 and 144,455,283
outstanding at December 31, 2004 15 14
Additional paid-in-capital 2,722,475 2,719,576
Accumulated other comprehensive income (12,988) (12,652)
Treasury stock, at cost (30,453) (30,453)
Accumulated deficit (2,482,523) (2,482,906)
----------- -----------
Total stockholders' equity 196,526 193,579
----------- -----------
Total liabilities and
stockholders' equity $ 408,707 $ 407,347
=========== ===========
Statements of Cash Flows
Unaudited
(in thousands)
Three Months Ended
March 31,
---------------------
2005 2004
-------- -------
Cash flows from operating activities:
Net Income $ 383 $ 2,928
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,050 8,071
Asset disposals 9 -
Noncash interest 143 216
Allowance for doubtful accounts 529 686
Equity in losses of investees 207 -
(Gain) loss on sale of marketable
securities and privately held investments (568) (8,032)
Changes in operating assets and
liabilities,
net of acquisitions
Accounts receivable 6,361 7,126
Other assets (148) (2,397)
Accounts payable 170 94
Accrued liabilities (3,449) (2,499)
Other long-term liabilities (146) 319
-------- -------
Net cash provided by operating
activities 9,541 6,512
-------- -------
Cash flows from investing activities:
Purchase of marketable debt securities (2,403) (9,717)
Proceeds from sale of marketable
debt securities 4,687 9,640
Proceeds from sale of investments in privately
held companies 568 9,095
Investments in privately held companies (850) -
Net cash paid for acquisitions (3,185) (1,673)
Capital expenditures (5,164) (3,277)
-------- -------
Net cash provided by (used in)
investing activities (6,347) 4,068
-------- -------
Cash flows from financing activities:
Payments received on stockholders' notes - 137
Net proceeds from employee stock purchase plan 330 227
Net proceeds from exercise of options 2,573 3,042
Proceeds from borrowings 10,000 -
Principal payments on borrowings (10,013) (77)
-------- -------
Net cash provided by financing
activities 2,890 3,329
-------- -------
Net increase in cash and cash equivalents 6,084 13,909
Effect of exchange rate changes on cash and
cash equivalents (730) (1,897)
Cash and cash equivalents at the beginning of
the period 29,560 65,913
-------- -------
Cash and cash equivalents at the end of
the period $ 34,914 $77,925
======== =======
Business Segments
Unaudited
(in thousands)
CNET's primary areas of measurement and decision-making include two
principal business segments. CNET has determined that its business
segments are U.S. Media and International Media. U.S. Media consists
of an online network focused on three content categories: personal
technology, games and entertainment and business technology.
International Media includes the delivery of online technology
information and several technology print publications in non U.S.
markets. Management believes that segment operating income (loss)
before depreciation and amortization expenses is an appropriate
measure of evaluating the operating performance of the company's
segments. However, segment operating income (loss) before depreciation
and amortization expenses should not be considered a substitute for
operating income, cash flows or other measures of financial
performance prepared in accordance with generally accepted accounting
principles.
U.S. International
Media Media Other (1) Total
-------- ------------- -------- --------
Three Months Ended
March 31, 2005
Revenues $62,304 $12,408 $ - $74,712
Operating expenses 52,731 15,518 6,050 74,299
------- ------- ------- -------
Operating income
(loss) $ 9,573 $(3,110) $(6,050) $ 413
======= ======= ======= =======
Three Months Ended
March 31, 2004
Revenues $52,769 $10,628 $ - $63,397
Operating expenses 47,119 13,868 8,071 69,058
------- ------- ------- -------
Operating income
(loss) $ 5,650 $(3,240) $(8,071) $(5,661)
======= ======= ======= =======
(1) For the three months ended March 31, 2005, other represents
operating expenses related to depreciation of $3,915 and amortization
of $2,135. For the three months ended March 31, 2004, other represents
depreciation of $7,171 and amortization of $900.
Quarterly Statistical Highlights
Unaudited
Q105 Q404 Q3-04 Q2-04 Q1-04
------- ------- ------- ------- -------
Total Quarterly Revenue
($mm) $74.7 $89.2 $70.5 $68.1 $63.4
Revenue Distribution (%)(a)
Marketing Services 78% 79% 75% 77% 76%
Licensing, Fees and User 14% 11% 12% 10% 12%
Publishing 8% 10% 13% 13% 12%
Advertiser Metrics
CNET Networks Top 100 US
Advertisers' Renewal Rate
(Q-to-Q) 97% 96% 95% 98% 89%
CNET Networks Top 100 US
Advertisers' % of Network
Revenue 56% 54% 57% 56% 58%
Select Business Metrics
Network Unique Users (mm) 105.9 103.0 88.7 74.2 76.5
Network Average Daily
Page Views (mm) 94.7 85.0 61.8 41.8 44.2
Balance Sheet Highlights ($mm)
Cash $34.9 $29.5 $29.1 $62.6 $77.9
Marketable Debt Securities 42.3 44.4 44.7 71.1 51.6
Restricted Cash 19.8 19.8 19.8 19.8 19.7
------- ------- ------- ------- -------
Total Cash
and Equivalents $97.0 $93.7 $93.6 $153.5 $149.2
Total Debt $146.5 $144.6 $129.3 $129.4 $118.1
Days Sales Outstanding
(DSO) 72 67 65 65 66
(a) Revenue distribution definitions are as follows:
Marketing Services - sales of advertisements on our Internet network
through impression-based and activity-based advertising.
Licensing, Fees and User - licensing our product database, online
content, subscriptions to online services, and other paid services.
Publishing - sales of advertisements in our print publications,
subscriptions and newsstand sales of publications, and custom
publishing services.
Guidance to the Investment Community
-----------------------------------------------
Q1-05 Q2-05 estimate FY 2005 estimate
$ in millions, Actual Low - High Low - High
except per share
-----------------------------------------------
Interactive Revenues $68.5 $75.0 - $78.0 $315.0 - $323.0
Publishing Revenues $6.2 $6.0 - $7.0 $30.0 - $32.0
Total Revenues $74.7 $81.0 - $85.0 $345.0 - $355.0
Operating income
before depreciation
and amortization $6.5 $11.5 - $13.5 $64.0 - $69.0
Depreciation expense ($3.9) ($4.5) ($19.5)
Amortization expense ($2.1) ($2.7) ($10.5)
Operating income $0.4 $4.3 - $6.3 $34.0 - $39.0
Interest expense, net ($0.4) ($0.4) ($1.5)
Other income (expense) ($0.1) ($0.1) ($0.5)
Tax benefit (expense) ($0.1) ($0.3) ($1.8)
Earnings per share $0.00 $0.02 - $0.03 $0.20 - $0.23
--------------------------------------------------------------------
FY 2005 earnings per share guidance is based on a share count of
approximately 160 million shares, of which 8.3 million shares are
attributable to the impact of EITF 04-8.
Safe Harbor Statement
This press release and its attachments include forward-looking
information and statements that are subject to risks and uncertainties
that could cause actual results to differ materially. These
forward-looking statements include the statements under the section
entitled "Business Outlook," which sets forth our estimated financial
performance for the second quarter and full year of 2005, and
statements regarding our growth prospects and expectations regarding
the future success of our products and services. In addition,
management expects to provide forward-looking information statements
on the conference call to be held shortly following the issuance of
this release, which are also subject to risks and uncertainties that
could cause actual results to differ materially. The forward-looking
statements in this release and on the conference call are identified
by the words "expect," "estimate," "target," "believe," "goal,"
"anticipate," "intend" and similar expressions or are otherwise
identified in the context in which they are made as being
forward-looking. These statements are only effective as of the date of
this release and we undertake no duty to publicly update these
forward-looking statements, whether as a result of new information,
future developments or otherwise. The risks and uncertainties that
could cause actual results to differ materially from those projected
include: a lack of growth or a decrease in marketing spending on the
Internet due to failure of marketers to adopt the Internet as an
advertising medium at the rate that we currently anticipate; a lack of
growth or decrease in marketing spending on CNET Networks' properties
in particular, which could be prompted by competition from other media
outlets, both on and off the Internet, dissatisfaction with CNET
Networks' services, or economic difficulties in our clients'
businesses, as evidenced in previous periods by many of our enterprise
technology customers; economic conditions such as weakness in
corporate or consumer spending, which could prompt a reduction in
overall advertising expenditures or expenditures specifically on our
properties; the failure of existing advertisers to meet or renew their
advertising commitments as we anticipate, which would cause us to not
to meet our financial projections; the failure to attract advertisers
outside of our traditional technology and consumer electronics
categories, which would cause us to not meet our financial
projections; a continued decline in revenues from our print
publications as advertising dollars shift to other media; the
acquisition of businesses or the launch of new lines of business,
which could decrease our cash position, increase operating expense,
and dilute operating margins; an increase in intellectual property
licensing fees, which could increase operating expense, including
amortization; the risk of future impairment of our intangible assets,
goodwill or investments based on a decline in our business or
investments; and general risks associated with our business. For risks
about CNET Networks' business, see its Annual Form 10-K for the year
ended December 31, 2004 and subsequent Forms 10-Q and 8-K, including
disclosures under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Conditions and Results of
Operations," which are filed with the Securities and Exchange
Commission and are available on the SEC's website at www.sec.gov.
Operating Income (Loss) Reconciliation
(in thousands)
Three Months Ended
March 31,
-------------------
2005 2004
-------------------
Operating income (loss) before depreciation
and amortization $ 413 $(5,661)
Depreciation 3,915 7,171
Amortization of intangible assets 2,135 900
------ -------
Operating income before depreciation
and amortization $6,463 $ 2,410
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The company believes that "operating income (loss) before depreciation
and amortization" is useful to management and investors in evaluating
the current operating performance of the company, since depreciation,
amortization and asset impairment include the impact of past
transactions and costs that are not necessarily directly related to
the current underlying capital requirements or performance of the
business operations. Management refers to "operating income before
depreciation and amortization" to compare historical operating
results, in making operating decisions and for planning and
compensation purposes. A limitation associated with this measure is
that it does not reflect the costs of certain capitalized tangible and
intangible assets used in generating revenue. Management evaluates the
costs of these assets through other financial measures such as capital
expenditures. "Operating income before depreciation and amortization"
should be considered in addition to, and not as a substitute for,
other measures of financial performance prepared in accordance with US
GAAP.
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