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Geeknet (GKNT) Q4 Ending December 31, 2010. ThinkGeek Blows Away Expectations. ThinkGeek and Media, Now Two Separate Companies, Pending Spinoff of Media Division?

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February 19, 2011 – Comments (5) | RELATED TICKERS: GKNT , AMZN , BBY


Geeknet (GKNT) Q4 Ending December 31, 2010. ThinkGeek Blows Away Expectations. ThinkGeek and Media, Now Two Separate Companies, pending spinoff of Media Division?

Fourth Quarter 2010 Financial Results Conference Call Feb 15, 2011 at 11:00 AM PT 

Geeknet inc q4 2010 Earnings call Transcript by Morningstar [See financial highlights below].

 

Note: There were four take-aways which prominently stood out from this conference call. 

1. Caroline Offutt is a proven, superior manager and CEO of a formidably disruptive and growing eCommerce company. Obviously the same goes for her team. [Note: I would like to see a refresh of the site].

2. The question from Robert Cohen to Scott Collison says it all about both the Media Division and the current CEO. Is the Media division one visionary CEO away from ThinkGeek performance?

3. Nicely done Mr. Langone. No one has been able to accomplish this since the VA Linux Systems IPO in 1999. (Note: Bonuses should have been awarded one year from now based on [sustained quarterly revenue growth and earnings performance].

4. All of the analysts on the phone congratulated GKNT management for a superior quarter. The Street has unanimously bought in.



The Conference Call.

Todd Friedman, The Blueshirt Group introductions.

Ken Langone

1:53 Ken Langone, Executive Chairman..."...organizational changes that have transpired since our last call... 2:21 move to thinkgeek hq fairfax, va

2:40 closed down Mt View location...hq'd media operation in SF, combined with offices in NY and London.

3:00 [Langone, cont] Caroline Offutt, CEO Thinkgeek, Scott Collison CEO Media Group...linking the two sides is Katy McCarthy...I will ontinuue to serve as Executive Chairman and CEO, however these individuals will carry the primary responsiblity for strategic decisions as they pertain to their divisions.

3:35 [Langone, cont] I want to add just one thing....of what I found and why I am so excited...about the people...I think I have never had the good fortune ever to work with a more driven, motivated, highly ethical, great values gwoup of people than this group...I had no idea that the depth of the talent as well as the ethics and integrity of all these people is...certainly an excicting experience for me and I have nothing more to say.

8:21 Katy McCarthy R&D expenses decreased $900,000 or 40%.

8:47 Katy McCarthy: "...during the quarter we sold geek.com. You will see the geek.com results incorporated in as discontinued operations for the quarter and for the year..."

Caroline Offutt

10:52 Caroline Offutt: Some of our most successful new product launches were:

The Star Trek Pizza cutter.

The TK-421 iPhone case with flipout keyboard. [Significant]

The iPad bluetooth keyboard case and

kids version of electronic guitar shirt.

11:16 Our in-house product development group Geek labs created and launched 18 new products in q4 and a total of 28 new products for the year. [Emphasis added]

11:18 Some other notable geek lab products for 2010 were the electronic music synthesizer shirt, my first bacon and Kids electronic t-shirt made the biggest media splash in 2010 and specifically in q4... over 200,000 twitter followers and over 150,000 Facebook fans...


Scott Collison

14:54 Scott Collison: SourceForge downloads are up 56% yoy in December 2010. and unique visitors are up 28% over December 2009. slashdot site traffic up 100% dec 2010 over 2009...

16:58 "...we are pursuing the following initiatives for 2011...".

1. Improving advertising operations.

2. Rebuilding our marketing dept.

3. Actively courting open source projects to download with us.

4, Create a stronger brand with software users.

5. Increase our focus on Europe.

Questions

20:13 Questions.

20:43 Bill Gay, Gay Capital: Can you comment on seasonality on your business...

22:02 Have you provided any guidance and if not why not? 

Katy McCarthy: We have not provided guidance in the past (not true) and do not intend to provide guidance at this point.

The Key question

23:03 Operator: (Robert Cohen, Western International).

Robert Cohen - Western International: First of all congratulations on a great quarter guys and Ken, it's great to see you come in here and really bring together a fantastic group to really finally get this Company on the right track. My question is for Scott. Scott, in the SourceForge business, can you give us an idea of how many unique hits you're averaging now and also, what would the rule of thumb be, what kind of revenues should you really be generating, if you got 10 million unique hits, would you typically be getting $1 to $5 per pop, or can you go through that a little bit?

Scott Collison - President and CEO: What I can tell you is we do about 42 million uniques a month on SourceForge, primarily through software downloads...

Robert Cohen - Western International: I'm talking about in traditional advertising, the rule of thumb is, you could typically plan on getting $1 to up to $5 per pop, per eyeball, which means, if you have 10 million, you should be able to get anywhere from $10 million to $50 million in revenue of advertising dollars. Can you tell me, is your a rule of thumb for the unique hits of a minimum and a maximum of what you think you guys eventually could be getting in that area?

Scott Collison - President and CEO: I don't know if I can be that specific, but what I will say is, remember our traffic is global and so one of the things we need to do is optimize, how we extract revenue from European traffic for example,. It makes a very difficult to come up with rule of thumb for eyeball, considering these are different B2B tech markets or different regions that require different sales forces and different partner.

26:13 Douglas Whitman, Whitman Capital "...Thank your Caroline. Thank you for such a spectacular results. Could you talk a little bit about – your growth is far higher than the rest of the eCommerce industry and you're outstripping growth at very a dramatic rate..."

29:22 Ralph Weil, R Weil Investments. Inventory level high end ogf the quarter....are you comfortable with...

Offutt: I feel very comfortable with the inventory levels... [Emphasis added].

30:47 Jordan Rohan, Stiefel Nicolaus Congratulations on a great quarter...Why do you have the b2b businesses together (Media with eCommerce)...how do you sell it?...

32:55 Langone addresses the reason for the disparate businesses...Media business offers great leverage at the bottom line...The board is exited about the prospects of both businesses as standalone separate businesses...[emphasis added]. Pending spinoff / Secondary Offering(s)?.

 

Note: There was no mention of feedery.com nor the iCade... 


The Official Release

FAIRFAX, Va., Feb. 15, 2011 (GLOBE NEWSWIRE) -- Geeknet, Inc. (Nasdaq:GKNT), the online network for the global geek community, today announced financial results for the quarter and year ended December 31, 2010.

Total revenue for the fourth quarter of 2010 was $50.0 million compared to $32.6 million of revenue for the fourth quarter of 2009. Net income for the fourth quarter of 2010 was $4.7 million or $0.75 per diluted share compared to net income of $1.5 million or $0.25 per share, for the same period a year ago. Adjusted* EBITDA for the fourth quarter of 2010 was $5.7 million, compared to adjusted EBITDA of $2.8 million for the same period a year ago. A reconciliation of net income (loss) as reported to adjusted EBITDA is included in this release.

Fourth Quarter Highlights:

E-commerce revenue increased 60 percent to $44.7 million for the fourth quarter of 2010, compared to $27.9 million for the fourth quarter of 2009. E-commerce orders shipped increased by 72 percent in the fourth quarter of 2010 as compared with the same period last year.

Media revenue increased 12 percent to $5.3 million for the fourth quarter of 2010, compared to $4.7 million for the fourth quarter of 2009.

Total cash and investments at the end of the fourth quarter 2010 was $35.3 million.

"Geeknet closed 2010 with a stellar fourth quarter. ThinkGeek grew revenue by 60% and our media business demonstrated early signs of traction with our new strategy as evidence by its solid growth over last year," said Ken Langone, Executive Chairman, Geeknet. "Our 44% growth in revenue for the full year demonstrates the strength of our community and our marketing efforts. We look forward to continued success in 2011 as we remain focused on growing top line revenue and increasing profitability."

Revenue for 2010 grew 44% to $94.6 million, driven by a 55% increase in ThinkGeek revenue and an 11% increase in media revenue. Net loss for 2010 was $4.4 million, or $0.73 per share, compared to a net loss of $14.0 million, or $2.31 per share, for 2009.

Adjusted* EBITDA loss for 2010 was $1.2 million, a 64% improvement compared to adjusted EBITDA loss of $3.6 million for 2009.

* Adjusted (backing out severance costs).


About Geeknet, Inc. Geeknet is the online network for the global geek community. Our sites include SourceForge, Slashdot, ThinkGeek, and freshmeat. We serve an audience of nearly 55 million users* each month and provide the tech-obsessed with content, culture, connections, commerce, and all the things that geeks crave. Want to learn more? Check out geek.net. [Note: Geek.net badly needs a refresh].

(*January 2011 Unique Visitors 54.9M. Source: Google Analytics and Omniture)

5 Comments – Post Your Own

#1) On February 20, 2011 at 7:56 AM, gnulaw (52.98) wrote:

Further comments / Addendum:

>>8:21 Katy McCarthy R&D expenses decreased $900,000 or 40%. * (References, Correlation between Stock Price and R&D))

>> Scott CollisonIs the Media division one visionary CEO away from an equally ThinkGeek disruptive performance?

GitHub has 13,863 followers on Twitter, 329,000 coders, 1,012,000 repositories. Launched February 2008. - July 28, 2010.

SourceForge has 11,363 followers on Twitter, 2.7M registered users, >230,000 projects. Launched November 1999.  - July 28, 2010.

 

Today, February 20, 2010

 

GitHub has 25,179 followers on Twitter (81.6% increase in ~7 mo), 600,936 people hosting over 1,739,860 repositories.

SourceForge has 15,232 followers on Twitter (34.1% increase in ~7 mo), 2.7M registered users, >260,000 projects.

qed

Scott Collison References:

1. (November 20, 2010) [Update1] Geeknet's GKNT Feedery.com - A Recommendation Engine That Tailors News To Individuals - Is it real or is it Fossfor.us?

2. (November 18, 2010) [UPDATE1] Geeknet (GKNTD) Names Scott [Ohloh] Collison as President and GM, Media and Announces Move from Silicon Valley to ThinkGeek's HQ, Virginia, CFO to Resign.

3. (November 01, 2010) [Update1] Geeknet Divests ohloh. The Minds Behind Ohloh.net Failed to Turn Geeknet GKNTs World Class Open Source Assets Into Something Extraordinary. What's Next for SourceForge.net and Slashdot.org?

4. (October 16, 2010)  [Update2] Geeknet (GKNT) Announces Sale of Ohloh.net to Black Duck Software. What's Next for SourceForge.net and Slashdot.org?

5. (July 28, 2010)  Is Geeknet (LNUX)s SourceForge Following Slashdot's Foot(Mis)steps?

* Stock Price and R&D References:

1. R&D Spending And Profitability: What's The Link?

2. Decreasing returns to shareholders from R&D spending in the computer industry.

By Nystrom, Halvard E
Publication: Engineering Management Journal 
Date: Saturday, September 1 2001 

3. The Stock Market Valuation of Research and Development ExpendituresLouis K. C. Chan1, Josef Lakonishok2, Theodore Sougiannis3 Article first published online: 17 DEC 2002

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#2) On February 22, 2011 at 6:36 PM, gnulaw (52.98) wrote:

ThinkGeek.com releases Geek-A-Week Trading Cards  available now  launched by Signed First Edition ebaY Fundraising Auction . 

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#3) On March 01, 2011 at 6:45 PM, gnulaw (52.98) wrote:


>>ThinkGeek and Media, Now Two Separate Companies, Pending Spinoff of Media Division?

 

>>3:00 [Langone, cont] Caroline Offutt, CEO Thinkgeek, Scott Collison CEO Media Group...linking the two sides is Katy McCarthy...I will continue to serve as Executive Chairman and CEO, however these individuals will carry the primary responsiblity for strategic decisions as they pertain to their divisions.

Pure speculation...It appears likely that GKNT will soon (< 6 months) engage in an IPO for the Media Division and possibly as well for ThinkGeek...in ThinkGeek's case an IPO will be necessary simply to allow them to sustain their growth. ThinkGeek is building an arguably formidable pipeline (1.) ala Genentech and the IPO climate is heating up (2.)


References


1.  ThinkGeek's pipeline ( iCadeJOYSTICK-ITGeek-A-Week trading cards...)

2.  (Feb 25, 2011) Renaissance: US IPOs Are Back 


 

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#4) On April 23, 2011 at 8:04 PM, gnulaw (52.98) wrote:

Fool is denying every post I attempt to make. My apologies to those I am trying to reply to or update.

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#5) On April 25, 2011 at 5:21 PM, gnulaw (52.98) wrote:

Thinkgeek should climb about 62 spots and come in at appx. 170 (1.) on Internet Retailer's "The Top 500 List" from 232 based on its fy 2010 revenues of $76,335,000.

 

(1.) Source: internet retailer .com/top500/list/?page=2  Note: Sorry about the coldlink. Motley Fool flagged this site as spam so was unable to hotlink it. MF has a very aggressive spam filter which they are working on. In the meantime...

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