(Update2) (Geeknet:GKNT) A Geek Tragedy - Q4/FY Ending 12/31/11
Update1 (NASDAQ:GKNT) A Geek Tragedy - Q4/FY Ending 12/31/11.
Below I highlight GKNTs Valentine's Day conference call. Here are the key takeaways.
Key Takeaways from GKNTs Valentines Day Conference Call:
1. On Valentine's Day 2008 a Hedge Fund Manager and GKNT 13D Shareholder sent a demand letter to the GKNT Board of Directors to unlock value when the stock closed at $1.78 (pre 1:10 reverse split) or $17.80 adjusted. GKNT closed at $16.06 Friday February 17th 2012 as Langone provided millions in compensation for failed executives and initiatives not based on performance. Since February 14, 2008 (four years) GKNT non-insider shareholders have unequivocally witnessed only continuing patterns of shareholder value destruction.
2. No one sounded excited/confident/in control on the call except for Katy. Drobick knows his stuff but didn't sound convinced himself of their strategy possibly due to current management/product structure he does not agree with. Someone is hobbling Drobick imo. Drobick is a superior asset.
3. Langone was conspicuously reserved. He was managed (PC) at this CC viz-a-viz a political candidate. He read (poorly) from a script opening the call vs. generally being all over the place during each preceding CC since his arrival.
4. Langone never mentioned the employees. Langone would consistently fall all over himself how great the employees are and how much he has learned from them during each quarterly CC since his arrival.
5. Colon Washburn never mentioned GKNTs 433,816 Twitter followers, 252,343 Facebook followers and 53M monthly unique visitors representing GKNT's social media infrastructure, viral marketing campaigns' competitive advantages. He again also completely sounded out of touch with this market...because he is.
6. There was only one analyst on the call with questions. One.
7. No hard questions were asked, AGAIN. e.g. What accounted for the dramatic drop in SF downloads and the accordant implications.
8. What is Jeff Drobick's motivation to stay at GKNT? It was very evident the he sounded as if he knew the Media division and his career were at a dead end. He did not sound like he wanted to be there.
9. Langone could not believe there were no more questions/analysts on the conference call. He was speechless right around 24:59 into the CC.
10. Langone should have made Jeff Drobick CEO and stepped down last quarter.
11. After Jeff Drobick is made CEO he should be provided carte blanche latitude to restructure GKNT management/Business Units which may include spinning off ThinkGeek and engaging in an IPO while concommitantly putting GKNT into an acquisition bidding war with IACI, AMZN, BBY, et al. The fact Langone has not made this obvious move with Drobick represents yet another smoking gun and confirms Langone has simply failed to create non-insider shareholder value.
EBITDA EBITDA EBITDA, THAT'S ALL FOLKS!"
GKNT Q4 2011 Ending Dec 31 Conference Call. Total length: 25:17.
1:45 - 3:14 Ken Langone (reading from a script)
3:15 Katy MCarthy (solid presentation/delivery).
3:35 (and 4:52) 2011 (total) rev +26% to $119.5M...driven by 30% growth in Thinkgeek revenue combined with 12% growth in Media (Jeff Drobick) revenue.
5:28 Thinkgeek revenue for the 4th quarter increased 23% to $54.8M.
5:53 Thinkgeek q4 product gross margin 26% vs 27% q4 2011
6:08 Our overall gross margin of 22% was flat with q4 2010. Product gross margin down from26% to 23%. 2011 overall gross margin was 16% vs 18% for 2010.
7:19 2011 Thinkgeek revenue grew 30%...Daily unique visitors grew by 34% to 71.3M.
8:37 Turning to our media (Jeff Drobick) business Revenue for 2011 was $4.9M down 6%. SourceForge download page views were down 18% at 195M v 239M in 2010. 2011 monthly unique visitors were 46.8M up 10%, however q4 2011 monthly unique visitors were 45.1M down 10%. In 2011 Media drove 12% growth in revenue with positive EBITDA while traffic was down.
9:45 Expenses companywide - R&D up 20%.
10:19 We ended the qurter wtih cash and investments of $36.9M.
10:41 Colon Washburn
11:28 National partner with Old Navy.
12:55 Media exposure - q4 - products like iCade/Electronic Guitar Shirt attracts non-traditional business to our site.. iCade featured on the Today show. also appeared in NY Times, CNN, GMA,and USA Today,..
15:51 Jeff Drobick - the media busienss was down 6% q4 primarily because of the drop in traffic...Traffic for the year was down but revenue was up and we delivered profitability for the full year.
16:24 2011 was a year in transition for the Media business...Geeknet Media is the first and global social media destination for B2B technology professional with our community of over 40M active IT decision makers who are developing software, downloading applications, and commenting on technoliogy news...
17:00 We will accelerate traffic through several exciting initiatives. First..SourceForge...we will continue to work on a expanded catalog of open-source projects, a better directory showcasing the best of open-source software, localized offerings, and new content verticals for our community. We have major releases planned for the developer experience on SourceForge.
17:24 And on Slashdot we are investing in mobile and making our core site better.
17:43 Today we are announcing a new marketing services line designed to expand our relationship with our existing lead-generation clients and offer community engagement and high-impact marketing programs. We are uniquely positioned to be the first place in B2B tech you go for integrated high-ROI programs that include demand-generation custom content custom community and research that tech company's are seeking.
18:07 Third, we will deliver new and innovative social advertising products. One example being "Ask Slashdot" that allows our advertisers to transparently engage with our community on specific high-value topics...Finally we're focused on the global opportunity...2011 grew int'l rev 88% YoY.
19:20 Open the line for questions:
19:50-24:34 James Dobson, Benchmark.
24:35 NO FURTHER QUESTIONS
24:59 Ken Langone (a very spent, confused, defeated Ken Langone).