The price was $11.50. Cnet has been under pressure by activist shareholders to sell the company or restructure units.

According to CBS "The acquisition will make CBS one of the 10 most popular Internet companies in the United States, with a combined 54 million unique users per month, and approximately 200 million users worldwide."

It is, however, a TV company buying a online tech business. Nice match

Douglas A. McIntrye

• Aqua America (NYSE: WTR) cut to Market Perform at Wachovia.
• Boyd Gaming (NYSE: BYD) started as Sell at Banc of America.
• CNET (NASDAQ: CNET) started as Buy at Kaufman Bros.
• Ctrip.com (NASDAQ: CTRP) cut to Neutral at Piper Jaffray.
• Google (NASDAQ:    GOOG) started as Buy at Kaufman Bros
• Housevalues (NASDAQ: SOLD) raised to Buy at Cantor Fitzgerald.
• Knight Capital Group (NASDAQ: NITE) cut to Equal Weight at Lehman Brothers.
• NYSE Euronext (NYSE: NYX) raised to Buy at Deutsche Bank.
• Sohu.com (NASDAQ: SOHU) cut to Hold at Deutsche Bank.
• VASCO Data Security (NASDAQ: VDSI) raised to Buy at Jefferies.

Jon C. Ogg
May 7, 2008

Total revenue was up a very modest 3% to $91.4 million. Non-GAAP operating income before depreciation, amortization, stock compensation expense, restructuring charges and stockholder proposals and stock option investigation related costs, net, was $1.7 million compared to $11.0 million during the first quarter of 2007.

CNET’s revenue is not growing as fast as internet advertising in general. That is almost impossible to explain given management’s argument that it has some of the best online content destinations in the world. CNET claims that its unique users are 161.3 million up from 143.7 in the same quarter a year ago. Average daily pages-views rose from 81.2 million last year to 89.7 million in the most recent period. In other words, CNET is getting a much smaller yield from its page-views and visitors than it was a year ago.

The company’s guidance was equally dismal. Revenue in the second quarter is expected to move up only 6% to 10%. On an EPS basis the company says it will breakeven.

Management views its financial performance as an improvement. With the figures from Q1 and CNET’s outlook, that can’t be supported.

Douglas A. McIntyre

They argue that stopping the destruction of shareholder value at CNET will require fundamental strategic and operational change.  Jana notes that implementing this change will require the type of experience and expertise it believes the Board nominees the group has proposed would add to CNET’s Board of Directors. 

JANA has noted that the performance of the current board of directors has presided over the loss of more than half of CNET’s market value since a majority of current directors have been in place.  CNET’s shares declined by -21%, -52%, and -25% in the one, two and three year periods ended March 28, 2008.  It also wants the board to explain why shareholders would not benefit from Jana’s proposed changes.

JANA addresses its rejection of CNET’s offer of one of the seven board seats the group is seeking.  It feels this would not bring the level of change needed at CNET.  There are many other criticisms.  CNET has failed to turn these assets into shareholder value and its own review was only initiated after outside pressure mounted. CNET has not taken necessary changes to protect the value of its strongest assets, instead expanding into new verticals. CNET needs comprehensive strategic and operational change to strengthen its core businesses and adapting to the modern Internet.  The group wants new leadership to create significant new value for shareholders.

JANA has joined with Sandell Asset Management Corp., Paul Gardi of Alex Interactive Media, Spark Capital and Velocity Interactive Group in seeking to elect two individuals to replace the board members who are up
for re-election and to expand CNET’s board by five members and nominate individuals to fill those vacancies.

We frequently discuss restructurings, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.  We also just covered CNET on our weekly "10 Stocks Under $10" subscriber letter yesterday.  We aren’t quite as optimistic on the instant value creation, but JANA’s approach is one of long-term changes rather than short-term shareholder rewards at the expense of the long-haul.

More detailed information can be found on this particular situation at www.JANAGroupInfo.com.

Jon C. Ogg
April 1, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Not a single person in the world is surprised that financials like Bear Stearns (NYSE: BSC), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), and Cigna (NYSE: CI) hit bottoms last weak. Over in the car business both Ford (NYSE: F) and GM (NYSE: GM) dropped to lows. Perhaps more surprising Toyota (NYSE: TM), the world’s most successful car company, came close. Given its vast resources and cash position, that news said more than the GM or Ford numbers did.

Airlines, as expected, were crushed. AMR (NYSE: AMR) was at the front of the Charge of the Light Brigade. Retail would also expected to be down and many stocks in that sector were at bottom including the previously popular Best Buy (NYSE: BBY).

The newspaper industry, the dying art of people reading information off something other than a computer screen, also had a number of lows, led by Gannett (NYSE:GCI) and McClatchy NYSE: MNI).

If the painful trend ended here, with these sectors, it would at least be in line with what might be expected in troubled industries in a slowing economy. But, it does not.

Communications companies, in both telecom and cable, hit bottoms. Verizon (NYSE: VZ) did the limbo. So did Comcast (NYSE: CMCSA). These firms are known for the breadth of their businesses, astonishing cash flow, and iron-clads balance sheets. By the market’s logic, that data meant little.

Tech also was sucked under. That included some of the first class companies in the sector like Adobe (NYSE: ADBE), Nvidia (NASDAQ: NVDA), and Infosys (NASDAQ: INFY). This is worth some analysis. NVDA is expected to have a 37% increase in revenue this quarter and EPS that will move from $.28 last year to $.39. The company is down almost 50% from its 52-week high. Analysts expect Infosys revenue to be up 32% for the current period. Wall St.’s whirlpool is taking under strong companies as it pulls down the weak.

The same might be said for Big Pharma. Bristol-Myers (NYSE: BMY), Pfizer (NYSE: PFE), and Merck (NYSE: MRK) all posted lows. The markets have been worried about their product pipelines, but that issue has not become more acute recently and these companies are still, for the time being, cash machines. Most have yields above 1.5% and some are much higher.

Deep trouble has also extended to the internet content business which has done well since the tech crash of 2000. Last week TheStreet.com (NASDAQ: TSCM), CNET (NASDAQ: CNET), and IACI (NASDAQ: IACI) dropped to 52-week lows. Given the low fixed costs that these companies sport along with pristine balance sheets, they would seem to be due some break.

Older line media companies, which have said they are not seeing any profound slowing in their businesses we sold off in a near panic dropping CBS (NYSE: CBS) and Time Warner (NYSE: TWX) to the lowest end of their charts.

Alternative energy stocks, not so long ago darlings, pushed to new bottoms. Verasun (NYSE: VSE) and Trina Solar (NYSE: TSL) could not hold on. Even the high cost of oil could not give them buoyancy

The most stunning part of all of this is the capitulation of the blue chips. Boeing (NYSE: BA) hit a 52-week low. The Air Force contract it lost is not worth enough spread over its life to do any real damage. Google (NASDAQ: GOOG) bottomed telling Wall St. that a company with 60% market share and 50% earnings growth was not worth some premium.

And, General Electric (NYSE: GE), the market’s poster boy for American services and industry, hit its low for 52-weeks. It has not backed off its robust projections for EPS improvement. It credit ratings remain the envy of almost every other company in the world. Its business and geographic diversity are supposed to make it the business equivalent of Plato’s ideal of the perfect state.

To look for investor concern about how deep and long the recession will be, the 52-week low list may be the most telling set of numbers available. It is an unusually broad and deep data-base. It is about money, and without emotion.

The list is saying that things are worse off than they seem.

Douglas A. McIntyre

Reuters writes that Microsoft (NASD: MSFT) may raise its bid for Yahoo! (NASD: YHOO).

Reuters reports that the current economic slump could be worse than recent downturns.

The Wall Street Journal writes that junk bond defaults are expected to spike up this year.

The Wall Steet Journal reports that the value of loans for corporate LBOs are falling sharply making them difficult for banks to sell.

The Wall Street Journal writes that Google (NASD: GOOG) is picking up its effort to increase its share of the Chinese market.

The Wall Street Journal reports that Disney (NYSE: DIS) posted strong results.

The New York Times reports that CBS (NYSE: CBS) wil launch a program to target mobile phone users by location.

The FT writes that possible downgrades of bond insurers hit bank stocks.

The FT reports that music companies have launched a lawsuit against Baidu (NASD: BIDU).

Barron’s writes that Macrovision is s cheap way to play the rise of the digital living room.

Barron’s reports that CNET"s (NASD: CNET) guidance for 2008 is light.

Douglas A. McIntyre

• AllianceBernstein (AB) noted as a hidden gem in Barron’s cover story.
• Answers Corp. (ANSW) announced a collaboration with Nokia for Series 40 and S60 mobile devices.
• Avocet (AVCT) lowered guidance
• Biogen-Idec (BIIB) and Elan (ELN) say that the safety data continues to support a favorable benefit-risk profile for TYSABRI.
• Celgene Corp. (CELG) trading up 5% after guidance is in-line for 2007 and issued new guidance for 2008.
• CNET (CNET) had a Jana Partners-led investor group take a 21% stake and try to oust the board of directors.
• Diana Shipping (DSX) trading up almost 2% on positive Barron’s article over weekend.
• 8X8 Inc. (EGHT) introduced a free international mobile calling plan with its new Packet8 MobileTalk trial.
• hhgregg (HGG) reaffirmed 2008 EPS guidance of $0.95 to $1.03 vs. $1.00 est.; s-s-s up 3%.
• JA Solar (JASO) announced a 3 for 1 stock split.
• Jefferies (JEF) issued earnings warning.
• Krispy Kreme (KKD) announced it has elected a new CEO.
• Microsoft (MSFT) said at "CES" it had 100 million licenses sold of Windows Vista; 17.7 million Xbox 360’s, 10 million Xbox live users; will have new content downloads.
• Napster (NAPS) will sell music with less copyright protection as MP3 files.
• Nice Systems (NICE) received multi-million dollar orders from 2 of the top-3 US banks for fraud alert.
• Rogers Communications (RCI) raised annual dividend from $0.50 to $1.00 and put 2008 revenues $11.2 to $11.5 Billion versus $11.25 Billion estimates; announced share buyback.
• Schnitzer Steel (SCHN) missed earnings and revenue targets; stock trading down 1% so far.
• Sony (SNE) introduces new tri-recording video Camcorder at "CES".
• TASER (TASR) unveils its new leopard print TASER C2 personal protection device at the 2008 International Consumer Electronic tradeshow in Las Vegas today.
• Zumiez (ZUMZ) said December s-s-s was +3.9%, but guided lower; shares down over 1%.

Jon C. Ogg
January 7, 2007

According to The New York Times "the consortium sent a letter about its plan to the CNet board two weeks ago, these people said, which the company has yet to disclose." The group is led by Jana Partners, an $8 billion fund.

Web content is becoming more and more valuable and CNET is a company which is the premier provider of content about technology. But, its shares have underperformed the market. The firm has several pieces including a software download service and TV operation. It may be the value of the shares would be enhanced if the company was broken into three.

The new announcement opens the door to the issue of whether companies with valuable content ranging from TheStreet.com (TSCM) to private companies like Huffington Post and TechCrunch could become more likely to outside offers.

The web is growing and portals lack quality content that they own themselves. That may change fairly quickly if CNET’s new investors show that the company has hidden value.

Douglas A. McIntyre

Reuters reports that analysts are trimming forecasts for the first and second quarter of this year as concerns about the economy get worse.

Reuters writes that Toshiba claims that its HD DVD format has not lost out to Sony’s (SNE) Blu-ray despite Warner’s decision to use Blu-ray exclusively.

The Wall Street Journal reports that McDonald’s (MCD) plans to add coffee bars at 14,000 stores in a challenge to Stabucks (SBUX) that could add $1 billion in sales to the fast food company’s revenue.

The Wall Street Journal reports that a number of large media companies have licensed content to Microsoft (MSFT) to be used on its Xbox Live and MSN services.

The Wall Street Journal reports that Liberty Media will buy Bodybuilding.com for $100 million in an effort to improve its internet portfolio.

The Wall Street Journal reports the Wikia has launched an open source search engine to compete with Google (GOOG).

The Wall Street Journal writes that GM (GM) is working on a car that will drive itself.

The Wall Street Journal writes that Comcast (CMCSA) will launch new technology which will make watching TV more simple.

The New York Times writes that Sony (SNE) sold 1.2 million PS3s over the holiday helping the Blu-ray fromat because a player is installed in each machine.

The New York Times writes that a group of outside investors is bidding to take control of CNET (CNET).

The New York Times writes that the company and CNBC will share content between their two websites.

The FT writes that Sony’s (SNE) success with Blu-ray is a blow to Microsoft’s digital media plans.

Barron’s writes that Microsoft will host a live video site for the Olympics.

CNN Money writes that more banks will cut dividends this year.

Douglas A. McIntyre

If comScore is accurate, tech blog TechCrunch had eight million pageviews in October. It begs the question of how CNET’s blog network is doing.

Douglas A. McIntyre