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Geeknet (NASDAQ:GKNT) Q2 Conference Call For Period Ending 30 June 2011

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3

August 05, 2011 – Comments (10) | RELATED TICKERS: GKNT , AMZN , IBM


Q2 ending June 30, 2011 conference call.

1:49 Kenneth Langone  2:11 "...as we have said repeatedly Geeknet is committed to profitable growth…"

5:35 Kathryn McCarthy "…ThinkGeek ... margin was 8%*(See reference) which is below our 2010 gross margin and can be attributed to primarily to discounts on discontinued inventory as we prepare to bring in new products for the q4 holiday season…" Note: Just as ThinkGeek prepared to bring in the TK-421 (Christmas 2010) and AirVolt May 2010

6:45 "…looking at the media metrics compared to the 2nd quarter last year monthly unique visitors are up 23%. The number of visits per month are up 10% and SourceForge download page views were 206M, an increase of 30% over q2 last year…7:44…and we remain on track to return the business to profitable growth…"

8:08 Caroline Offutt "…one of the highlights from the quarter was the launch of the iCade desktop arcade cabinet for iPad…the iCade has been extremely well received in the marketplace by both the customers and the media…and the iCade was the gift giving highlight of another successful father's day (q2 2011)…launched over 300 new products in the 2nd quarter…9:33 we are in full swing for 4th quarter planning. We recently completed the final stage of a major infrastructure project to ensure scalability and flexibility of our site and we will be launching a mobile site in advance of q4…9:53 "…another area that is important to our [q4] success is the launch of custom products produced by Geek labs, our internal development group. Geeklabs invented iCade and for the holidays they will be launching over 30 new and exciting products.  This innovation is one of our key differentiators….drive higher margins…

10:29 Jeff Drobick "…the media business had a very strong quarter with q2 2011 revenue at an all-time high of $5.8M which is an increase of 22%…over last year…slashdot continues strong growth…continue to see some of the highest engagement levels on the web…11:26 SourceForge…celebrating an important milestone…with over 300,000 open source software projects…and are on track to pass one billion total downloads in the second-half of this year…we will continue our efforts to be the best place for open source for developer collaboration and software distribution…and on slashdot to improve our core site and mobile experiences…invest in our core...improve how we monetize our traffic…

12:45 Katy  "…it was a strong 2nd quarter as we continue marching down the path to sustained profitable growth. Recently Geeknet was added to the Russell 3000 and Russell 2000 indices which we believe reflects continued positive momentum in efforts to increase shareholder value..."

13:06 Questions.

13:25 Fred Moran, Benchmark
19:30 Doug Whitman, Whitman Capital **
22:53 James Dobson, Benchmark

24:58 Jeff Drobick, in reply to James Dobson "…as it relates to the media business investment in core R&D…R&D for me is a very big priority…accelerating growth long-term will be built upon innovating in our products in our offerings to our customers for both slashdot and sourceforge and for me it is a priority to invest in R&D and advancing our products and customer experience..."


** Whitman Capital held 132,265 shares of GKNT as of March 31, 2011 as reported by NASDAQ.

Reference

* (Aug 02, 2011) Geeknet (GKNT) - Q2 Ending June 30 Out Wed Aug 3. Langone Must Deliver Profitability(.)  

10 Comments – Post Your Own

#1) On August 06, 2011 at 9:42 AM, gnulaw (51.54) wrote:

 

Comments to this Q2 ending June 30 2011 conference call:

 

1. GKNT management continues its alleged consistent patterns as a non-insider shareholder hostile company as covered on this siteand also recently here. 

Motley Fool on Fearful Stocks for Greedy Investors

"...Judging from the star ratings our CAPS members have assigned to these stocks, it seems investors share Wall Street's nervousness about Geeknet... (Can you blame them? According to Yahoo! Finance, precisely zero analysts follow each stock, with the result that lay investors have precisely zero guidance on what to expect from the companies' earnings going forward, and no one likes investing in an unknown quantity.)...".  See previous post.

2.  None of the analysts on the call questioned Jeff Drobick regarding Github's increasing market share, in general, and increasing dominance on Twitter as the de facto social coding platform nor more significantly did Jeff proactively address this glaringly obvious issue (additional and more recent issues discussed here).

3. What is Apple's position regarding the iCade? There is some evidence on Twitter that Apple's App Store is not allowing game companies supporting the iCade to mention they support the iCade. And if that is true will Apple pursue this more aggressively? Maybe this will be disclosed as a Risk in Geeknet's pending SEC Form 10-Q for the 3 months ended June 30, 2011.

4. Geek.net has not been updated for over one year including usage statistics as covered on this site. There has been no press supportive of Caroline Offutt's conference call claims:

8:08 Caroline Offutt "…one of the highlights from the quarter was the launch of the iCade desktop arcade cabinet for iPad…the iCade has been extremely well received in the marketplace by both the customers and the media…and the iCade was the gift giving highlight of another successful father's day (q2 2011).

Nothing. One must accordingly and simply question why and how The Blueshirt Group and Max Borges Agency negotiate these consistent patterns concerning implementation of basic shareholder value maximization / competitive advantage initiatives most companies implement as a given. 

Again, per this post (Comments 5 and 6):

Company Financials for the Q2 period ending June 30, 2011

Cash: $24.93M (incl short-term investments)
Revenues (3 mo): (in thousands) 

 Media: $5,751 (28.65%) 

 E-commerce (Thinkgeek):  $14,319 (71.35%) 

 Total:    $20,070


 Media Cost of Revenue: $1,459 (25.37%) (74.63% GM)

 E-commerce cost of Revenue: $13,209 (92.25%) (7.75% GM)

 Total Cost of Revenue: $14,668

Gross Margin: $ 5,402 (26.92%) (blended)


 Net Loss: (2,141)

 

The key takeaways are that Thinkgeek's gross margins have further deteriorated from 10.3% to [7.8%]. The Media Division's margins have increased from 71.4% to 74.6%. A very questionable Media division per the above timeline (see this post). Equally significant is that total revenues increased by only $154,000 or .77% over Q1 ending March 31, 2011, [while ThinkGeek's revenues decreased  5.8% Q2 vs Q1 2011].

Does this now conclusively confirm that Senior Management and the Board of Directors are disingenuous and conclusively do not have any concern for non-insider shareholders? Is this the new corporate culture at Geeknet?* I wonder how the employees feel about this...

*FALL OF HOUSE OF GRASSO .

 

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#2) On August 07, 2011 at 10:46 PM, gnulaw (51.54) wrote:

GKNT falls below its 200 MDA retracing pre-Langone 2008 levels.

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#3) On August 07, 2011 at 10:49 PM, gnulaw (51.54) wrote:

[CORRECTION] GKNT falls below its 200 Day MA retracing pre-Langone 2008 levels.

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#4) On August 16, 2011 at 5:47 AM, gnulaw (51.54) wrote:

GKNT + $1.55 (8.19%) on ~.58x ADV (3 mo). Short interest 286,393 shares *. Expect GKNT to go up just on short covering (vs. fundamentals). Currently showing ~ 12.8 days to cover based on ADV. 

* http://www.nasdaq.com/aspxcontent/shortinterests.aspx?symbol=GKNT&selected=GKNT

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#5) On September 05, 2011 at 7:27 PM, gnulaw (51.54) wrote:

(Sep 05, 2011) Atari is making its own Arcade controller for the iPad

"...It seems that Atari wasn’t content just partnering up with ThinkGeek’s iCade arcade cabinet for iPad. They’ve let slip the plans for an Atari Arcade joystick product in a link in the description of their Atari’s Greatest Hits app, reports Macrumors...."

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#6) On September 28, 2011 at 7:24 PM, gnulaw (51.54) wrote:

AFTER THE BELL (September 28, 2011)  4:04PM EST  Geeknet to Present at Craig-Hallum 2nd Annual Alpha Select Conference *

 

"...management will present at the Craig-Hallum 2nd Annual Alpha Select Conference in New York, NY on Thursday, October 6 at 1:30 p.m. EDT.

A webcast of the presentation will be available on the company's investor relations website at http://investors.geek.net/events.cfm..."

 

* It should be noted that this is the first investor conference Geeknet fka SourceForge (LNUX) has attended in years.

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#7) On November 01, 2011 at 10:21 AM, gnulaw (51.54) wrote:

Positive trends/developments past 30+ days...


1.  (November 01, 2011) Thinkgeek Twitter followers, 377,482.


2.  (October 18, 2011)  Dennis Goedegebuure’s (VP Internet Marketing, GKNT*) Thoughts on Changes in Google Analytics


3.  (October 14, 2011)  Dennis Goedegebuure’s Advice on Creating Effective SEO & IT Relationships


4. (September 30, 2011) Roberto Galoppini joins SourceForge as Senior Director of Business Development


* Dennis Goedegebuure is Vice President Internet Marketing of Geeknet Inc. In this position he is responsible for traffic for Slashdot & SourceForge. Prior to Geeknet, Dennis spent almost a decade at eBay.

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#8) On November 01, 2011 at 11:06 AM, gnulaw (51.54) wrote:

 

>>Positive trends/developments past 30+ days...

Two more:

5.  (October 25, 2011) Gizmodo - ThinkGeek’s IRIS 9000: The Best Reason Yet to Buy an iPhone 4S

6. (October 11, 2011) ThinkGeek.com Launches New Mobile-Friendly Sit

and one previously mentioned but deserves reviewing again.

GKNT short-interest as of October 14th - 307,242 shares, 11.4 days to cover. This could have a significant effect if positive numbers are delivered on Thursday.

 

 

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#9) On November 01, 2011 at 4:30 PM, gnulaw (51.54) wrote:

>>Positive trends/developments past 30+ days...

 

7. (October 29, 2011) Freshmeat changes its name to freecode.

8. (October 6, 2011) Craig Hallum Alpha Select Conference (Webcast & Presentation PDF)

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#10) On December 21, 2011 at 9:55 AM, gnulaw (51.54) wrote:

>>Kathryn McCarthy 6:45 "…looking at the media metrics compared to the 2nd quarter last year monthly unique visitors are up 23%. The number of visits per month are up 10% and SourceForge download page views were 206M, an increase of 30% over q2 last year…7:44…and we remain on track to return the business to profitable growth…"

but again unprofitable Q3 ending Sep 30 

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