Yahoo! has had layoffs in the past. So have its competitors AOL (NYSE: AOL) and Microsoft’s (NASDAQ: MSFT) MSN portal. But, it would be a mistake to believe that the “old” internet are the only ones downsizing. Former social network powerhouse MySpace has cut staff and there are rumors that its parent News Corp (NYSE: NWS) has lost patience with the property.

Whichever of these rumors is true or not true, online media has come of age, at least financially. Investors were once tempted by the promise of future success. They now want large profits. Growth is still important, but profits are even more important. That leaves online properties in a bind, especially those which have  been in business for a number of years. The market has lost its appetite for expansion and the losses that often go with it.

This means that more and more website will be shuttered or their expenses will be brutally cut. The argument of investors with interests in buying flagging online properties is that they can reach profitability through “downsizing”, which works until it doesn’t. Older online media companies are not unlike other businesses. Cost cuts are often counterproductive even if their temporary results are attractive

It is interesting to watch one of the oldest big companies in America sell its IPO. GM has, as part of its appeal its management and bankers claim, future profits. But, the real sale for the IPO is growth in sales and market share in the US, Europe, and China–especially China. GM will have few buyers for its shares if the promise is for future profits without any future growth. GM will actually increase expenses to fuel growth though new factories and employees

Yahoo! and MySpace, TheStreet.com (NASDAQ: TSCM), video site Hulu, job site Monster (NYSE: MWW), and a legion of other online firms have already cut costs and now have reached the bone. The market is not happy with cuts any longer. It wants to see profits and the path to those is often only through growth.

Douglas A. McIntyre

Jim Cramer, whose popularity has been responsible for almost all the success of TheStreet.com (NASDAQ:TSCM), has carried CNBC on his back for some time due to the high ratings of his “Mad Money” show. The ratings for the program dropped 52% in October.

CNBC’s very small competitor Fox Business may have been smart to get cowboy shock jock, Don Imus, now nearly 70, as its morning host. He is, at least, a broadcasting stable will millions of listeners who appear to follow him anywhere and through any weather. His presence is already helping ratings at Fox Business.

The viewing public may have tired of hearing about the markets after over a year of relentlessly hysterical news which has been both terribly bad in some patches and improbably good in others.

The business networks may have to wait for decades until the next stock market crash and credit market meltdown to get all of their viewers back.

For more 24/7 Wall St. TV visit us here.

Executive Producer: Philip MacDonald

Source: Zero Hedge

CAPSTONE TURBINE CORP. (NASDAQ: CPST) is being booted off as an “Energy” sector stock.  This microturbines player is a “less-dirty” power play, but stock offerings and a lack of sustained growth to get to profitability has taken the oomph away from this stock. But this one still has a deep retail base of stock owners and trades millions of shares per day.

FINISAR Corporation (NASDAQ: FNSR) is being kicked out as a “Technology” sector stock from the Russell 3000.  This high-speed data communication subsystems player just never took off as many hoped it would.  But it still has a cult stock following as it trades close to 2 million shares per day.  At $0.70, its market cap is $337 million and its 52-week range is $0.21 to $1.68.  During the tech bubble in 2000 this was a $20 to $50 stock.

Rick’s Cabaret International Inc. (NASDAQ: RICK) is being booted as a “Consumer Discretionary” sector member of the Russell 3000.  Rick’s may be the ultimate consumer discretionary example there is as it owns topless bars, i.e. gentlemen clubs.  The company is still profitable overall, but even at $6.17 per share its market cap is $57 million and its 52-week range is $2.44 to $21.98.

SIRIUS XM RADIO INC. (NASDAQ: SIRI) needs very little explanation.  It has gone to the basement and is being removed as a “Consumer Discretionary” stock in the Russell 3000.  Its market cap is north of $1 billion still, but we don’t even presume to know what turnaround would be required for it to get re-added.  It seems that the reverse split isn’t going to help matters, at least not as the Index Team at Russell is concerned.

TheStreet.com, Inc. (NASDAQ: TSCM) is being booted off the Russell 3000 as a “financial services” sector stock.  If you know Jim Cramer you know TheStreet.com.  At $2.22 it has a $67.9 million market cap and the 52-week range is $1.69 to $7.34.  The decline in CPMs for ad rates and the major purge of subscriber newsletter operations has knocked this stock down close to a net cash value if you can believe it.

Uranium Resources, Inc. (NASDAQ: URRE) is being booted off as a “Materials & Processing” sector stock in the Russell 3000.  This was a more popular stock when uranium prices were through the roof.  At $1.42 it has a $80 million market cap and its 52-week range is $0.36 to $4.70.  If uranium ever makes a huge comeback, this  company might get re-added.

VONAGE HOLDINGS CORP. (NYSE: VG) is being deleted from the “Utilities” sector from the Russell 3000.  The company stock has fallen to under $1.00 and is now even under $0.43 since the last rebalance.  It would have to rise another 50% or 100% to remain in the index.  This one has thousands and thousands of stockholders and millions of Vonage users.  But its share price dictates all, and you know the vote.  The 52-week range is $0.31 to $1.96.

Again, there are two more opportunities as the other Russell index changes will be amended today and again next Friday.  It is always possible that some of these will change.

Jon C. Ogg
June 19, 2009

Caterpillar Inc. (NYSE: CAT) gave a forecast last night that still shows an expected rebound.  Otherwise, the $50 billion mark in sales within five years would not have been forecast.  That $0.42 dividend was maintained, yet Caterpillar was one of the companies in late 2008 which we and many felt was at-risk for cutting the quarterly payout rate.

Clorox Co. (NYSE: CLX) raised its dividend by almost 9% to $0.50 per share from $0.46 and said it is on track to show numbers in-line with previous guidance for fiscal 2010.  The range of $4.00 to $4.15 EPS compares to $4.16 estimates.

Microsoft Corp. (NASDAQ: MSFT) is not an unusual dividend at $0.13, because at current share prices that represents only about 2.2%.  What seems unusual on the surface is that the company announced that shareholders representing at least 25% of shares can call a special meeting.  That formal notion will come up for vote at the shareholder meeting in November.

Target Corp. (NYSE: TGT) must not care too much about its recent proxy fight nor must it be too concerned about retail sales ahead.  The retail giant hiked its dividend to $0.17 from $0.16. Analysts are projecting $2.85 EPS for fiscal January 2010, so the company’s dividend coverage ratio is over 4 and more than sustainable.

TheStreet.com, Inc. (NASDAQ: TSCM) is still easily able to maintain its $0.025 quarterly dividend.  This comes to a 5% yield today, and is interesting because the few analysts which follow this one are expecting the losses to continue both this year and next.  Either the company thinks it will lose less money than Wall Street expects, or it does not mind picking away at its $76+ million in cash.

The most unusual dividend in the entire week has been the mystery at American Capital Ltd. (NASDAQ: ACAS), where a massive dividend of $1.07 was declared.  This will either be paid in cash or in stock.  The stock is up over 20% today, but based upon a $2.76 close yesterday this one is now paying a whopping 38% yield.  After today’s gains, the yield is still north of 30%.  Be advised, this dividend is higher than the entire earnings estimates for 2009 and 2010 and the company still has significant debt.

Vulcan Materials Co. (NYSE: VMC) cut its dividend in half, but said it was increasing its shares by about 10% via a $500 million estimated share offering.  This has taken a 6% bite out of the shares today.

There is also the case of the Aberdeen Australia Equity Fund Inc. (IAF), which just declared a quarterly distribution of $0.23 for the quarter.  While this still would get close to 10% in yield and while its dividends fluctuate wildly from quarter to quarter, this is actually the lowest payout since late-2006 and marks the fourth consecutive dividend cut.  With a 52-week range of $5.15 to $16.77, it seems this fund has been a serious dividend yielding instrument for the investors in the $200 million closed-end fund.

Jon C. Ogg
June 11, 2009

For companies such as Yahoo! (YHOO), TheStreet.com (TSCM), and IACI (IACI) the trend will be devastating to earnings. And, the worst may not be over.

Ads for which marketers pay very little, known in the industry as remnants, are still all over the top sites on the web. A recent ad at Yahoo! Finance markets a way to meet Russian women. Yahoo! Sports is running cheap ads for the “IQ Challenge.”  High-end political website Politico.com runs ads for Barron’s on its home page. The revenue from these is based on the number of Barron’s subscriptions sold, which can be very low.

The second quarter is going to be a tough one for the big online publishers.

Douglas A. McIntyre

YouTube was started in 2005 and MySpace in 2003. Normally, having a social network where people go to share profiles of themselves, write blogs, and submit videos would not seem like much of a business. But, MySpace has well over 100 million users. People viewed over five billion videos at YouTube last month. Investors assumed that any medium with such a large number of users has to become a huge business. Millions and millions of users must be worth something. They can’t be worth nothing. That couldn’t be possible.

Because Facebook and MySpace are so pervasive and such a significant part of online culture, the press is endlessly fascinated by what goes on at the companies. Word got out that Facebook was raising money. Then it fired its chief financial officer. Analysts started to speculate that the company was low on cash. Facebook, of course, said that no such thing was true.

What is true is that social network sites have had trouble making money. MySpace was supposed to be a big part of the revenue growth at News Corp. Wall St. thought Murdoch was a genius to buy it. Last year, News Corp had to admit that MySpace would not hit its revenue targets. That is usually not the hallmark of a property that is going to take over the Internet. Analysts believe that MySpace rival Facebook had revenue of $265 million last year. That is astonishingly low for a company that had 57 million unique visitors in the US last month. And, Facebook also has a very large international user base.

The reason that social networks will never do well financially is that they break from the successful model that has brought so many marketers to the internet. Display advertising can be targeted by subject. Financial advertisers run messages on AOL Finance (TWX) and TheStreet.com (TSCM). They avoid sites for children’s video games. Search sites like Google refined the model by allowing advertisers to buy search engine results pages. The Google results’ pages for the search “heart doctors in New York City” is probably the best place in the world for heart doctors in New York City to market themselves.

Social networks are bogs filled with people who are there to befriend one another, tell their stories, or voice their complaints. For those who want others to know all about them or who have unrevealed grievances about life, these are wonderful online destinations. They a good place to leave messages for friends, propose marriage, and post the scores from the local high school football team. They are not a place where an advertiser can focus on a single group with a message aimed at those people, because no one knows exactly who those people are. For a company trying to sell products or services, Facebook is mayhem in a PC. What the advertiser wants is traditional, orderly content.

With the exception of a certain number of perverts who sneak in, there is nothing wrong with social networks, but marketers don’t want the perverts and they don’t want a collection of people with no common purpose other than to share with one another.

Douglas A. McIntyre

Shares in Citigroup (C) jumped after CEO Vikram Pandit said that the firm was profitable in the first two months of 2009.  Many experts said the statement does not mean much if Citi books huge write-downs of toxic assets or if consumer and business credit defaults rise for the first quarter. Even after the improvement in the stock price following Pandit’s comments, Citi trades at only $2.25. If Pandit’s statement holds true for all of Q1 2009 and the bank makes money and dodges losses due to balance sheet impairments, Citigroup will at least double. Even at $5 the stock will still be well below its 52-week high of $27.35.

Macy’s, Inc. (NYSE: M) has not been immune to the economic slowdown.  This department store firm caters to the middle class, a part of the retail market which has been badly hurt by unemployment and tight consumer credit.  Analyst expectations are for $0.53 EPS for 2009.  A doubling of the stock still keeps this valuation at a forward P/E of 15. Analysts have been pessimistic about the shares.  Earnings estimates for 2009 have almost been cut by almost by one-third in the last 60 days.  Macy’s has lowered capital expenditures and closed a number of stores. This will keep revenue depressed, and to offset this Macy’s may have more layoffs this summer.   Wall St. has warmed to the cost cutting and Macy’s has had three analyst upgrades since the beginning of March. A year ago this was a $25 stock, and it was a $40 stock two years ago.  Macy’s went as low as $5.07 at the end of last year and a double to $10.14 wouldn’t be that be a significant move if there is any improvement in the company’s same-store sales trend.  The stock currently trades at $7.90.

Sonic Corp. (NASDAQ: SONC) may be one of the more unusual and old-school hamburger restaurant chains in America.   The shares have fallen from grace as because investors are concerned about its position as a suburban fast food business with a drive-in format.  McDonald’s recent success has caused concern that it may be taking market share from smaller competitors such as  Sonic.  The stock moved down as gas prices went over $3 and commodity prices  started to skyrocket.  Recently analysts cut estimates by 15% for this year to $0.85 EPS.  The flaw in these assumptions is that they are based on revenue at Sonic staying flat. While profits have dropped and same store sales have declined, there has been a marginal improvement in traffic now that Sonic has introduced a value menu.  Earnings for the next quarter may be weak, but the worst is probably behind the company now.  Sonic has high debt levels, but the lion’s share of does not mature until after two years from now.  The stock hit a recent low of $6.05. If it doubles to $12 the shares would be barely above the $10 where they traded earlier this year.

CBS (CBS) is a dog of a stock and a dog of a company. Its efforts to improve its online presence by purchasing internet content company CNET have done very little for earnings. It is clear that CBS overpaid for the acquisition. But, the company has one significant advantage that has little to do with management. It has a huge footprint in the broadcast TV market. As national advertising revenue recovers, so will CBS’ earnings.  CBS trades just below $4, down from a 52-week high of $25. In both 2007 and 2006 when the economy was relatively good, the firm made $2.6 billion on more than $14 billion in revenue. CBS may not get back to $25, but even a modest improvement in the marketing climate should allow the stock to double.

TheStreet.com (TSCM) depends on financial and high-end consumer advertising and a subscription business aimed at investors. A brutal market sell-off in addition to sharp cuts in marketing budgets for luxury goods and brokers have cut into TSCM’s growth. In the final quarter of last year, revenue fell 17% to $16.5 million. The company took an asset impairment write-off in the quarter, otherwise it would have operated at close to a breakeven down from a profit of $4.2 million in the same quarter a year ago. TSCM has over $76 million in cash, restricted cash, cash equivalents and debt securities available for sales. The firm’s market cap is $56 million.  Shares trade for $1.91 down from a 52-week high of $9.49. TheStreet has already indicated that the first part of this year is not looking any better. Even a modest recovery in revenue in the second half should put the shares back over $4.

ConocoPhillips (COP) is not like most other major corporations with global operations in the integrated energy industry.  Its stock has fallen more over the last year than Exxon Mobil (XOM) and Chevron (CVX), and has even underperformed the unattractive stock of BP plc (NYSE: BP).  Warren Buffett has been a huge investor in this company and it has hurt his overall portfolio returns.  Conoco’s last quarterly earnings were hurt as charges taken against earnings caused a loss of $31 billion.  On a better note, the firm raised $6 billion through securities sales.  Shares have fallen by about a third since earnings were released.  ConocoPhillips was a $95 stock last year.  Shares currently trade around $37.00 and for shares to double from lows the stock would have to move to $68.  If earnings for either of the next two quarters are even modest the stock will move up. The recent rise in oil prices could help that, if crude stays above $45.

Yahoo! (YHOO) is a “one event” stock. It will probably lay off a large number of people this year.  Display and search advertising may even improve.  But, the catalyst for a sharp increase in Yahoo!’s shares is that Microsoft (MSFT) will make a very attractive offer to take over the portal’s search operation. It will bring in enough cash and have high enough royalty payments that the stock will move back toward where it traded a year ago at a little over $26, which is still short of the 52-week high.

Apple (AAPL) has fallen sharply as analysts revise downward their earnings for the year. Most have cut estimates for Mac, iPhone, and iPod sales. Expectations for the next two quarters are low which has pushed the stock to $95, down from a 52-week high of almost $200. Apple will continue to pick up market share in the handset and computer sectors, offsetting most of the effects of the overall softness in those industries. The Apple iPhone App store currently has 15,000 applications and more than half a billion downloads. A large number of software programmers are using the iPhone as their platform of choice. Apple sales will be better than expected.

Gannett (GCI) will never recover. That is the conventional wisdom. It is in the newspaper business which is dead. Its debt was recently cut to junk by Moody’s and it reduced its dividend. Shares have fallen from a 52-week high of $31.86 to $1.85. Over the last year, the stock has dropped as much as shares in some of its major rivals. but Gannett is by far the strongest company in the industry. Even if Gannett out of business in a decade, it prospects over the next year or two are reasonable. Last year Gannett had revenue of $6.8 billion, down from $7.4 billion the year before. After backing out a non-cash charge, the firm made about$1.2 billion, off from almost $1.7 billion in 2007. Gannett’s revenue will almost certainly be down again this year, but it should benefit from two things. The first is cost cuts it has already made along with more that it is likely to make and the very good chance that the company will begin to close money-losing properties. The print industry will never be close to what it was five years ago, but small recovery in national and local advertising combined with brutal costs cuts will keep Gannett on its feet. The stock should be down, but not to under $2.

General Electric (GE) is also trading higher over the last week based on the notion that its financial services unit could be profitable for the first quarter. If it is, and the conglomerate’s large infrastructure business and NBCU post modest results, Wall St.’s perception of GE will turn positive as quickly as it turned negative. If GE’s  guidance is for a profit for the entire year in its financial operations and the company has moderately good numbers for the balance of its units, the stock could easily move back to $20. And, at that, it would still be only trade at half of its 52-week high.

Douglas A. McIntyre and Jon Ogg

These are the media stocks.

CBS (CBS) is a dog of a stock and a dog of a company. Its efforts to improve its  online presence by purchasing internet content company CNET have done very little for earnings. At this point, it is clear that CBS overpaid. But, the company has one significant advantage that has little to do with management. It has a huge footprint in the broadcast TV market. As national advertising revenue recovers, so will CBS earnings. CBS trades just above $3, down from a 52-week high of $25. In both 2007 and 2006 when the economy was relatively good, the firm made $2.6 billion on over $14 billion in revenue. CBS may not get back to $25, but even a modest improvement in the marketing climate should allow the stock to double.

TheStreet.com (TSCM) depends on financial and high-end consumer advertising and a subscription business aimed at investors. A brutal market sell-off in addition to sharp cuts in marketing budgets for luxury goods and brokers have cut into TSCM’s growth. In the final quarter of last year, revenue fell 17% to $16.5 million. The company took an asset impairment write-off in the period, otherwise it would have operated at close to a breakeven down from a profit of $4.2 million in the same quarter a year ago. TSCM has over $76 million in cash, restricted cash, cash equivalents and debt securities available for sales. The firm’s market cap is $56 million. Shares trade for $1.85 down from a 52-week high of $9.49. TheStreet has already indicated that the first part of this year is not looking any better. Even a modest recovery in revenue in the second half should put the shares back over $4.

Gannett (GCI) will never recover. That is the conventional wisdom. It is in the newspaper business which is dead. Its debt was recently cut to junk by Moody’s and it reduced its dividend. Shares have fallen from a 52-week high of $31.86 to $1.85. Over the last year, the stock has dropped as much as shares in some of its major rivals. but Gannett is by far the strongest company in the industry. Even if Gannett out of business in a decade, it prospects over the next year or two are reasonable. Last year Gannett had revenue of $6.8 billion, down from $7.4 billion the year before. After backing out a non-cash charge, the firm made about$1.2 billion, off from almost $1.7 billion in 2007. Gannett’s revenue will almost certainly be down again this year, but it should benefit from two things. The first is cost cuts it has already made along with more that it is likely to make and the very good chance that the company will begin to close money losing properties. The print industry will never be close to what it was five years ago, but small recovery in national and local advertising combined with brutal costs cuts will keep Gannett on its feet. The stock should be down, but not to under $2.

DISH Network (DISH) reported flat revenue in the fourth quarter at about $2.9 billion. Net income was up to $217 million from $175 million in the same period in 2007. Investors were upset because paid subscribers fell by 102,000 to 13.7 million. The recession was almost certainly the cause of the drop. DISH shares have fallen considerably since hitting a 52-week high of $36.11. They now trade at $9.74. DISH subscription counts should level off or even move up some as the economy improves and, even in a downturn, it is doing well.

Douglas A. McIntyre

AMBAC Inc (ABK) Market hates it earnings. Drop to $.56 from 52-week high of $12.37.

Synta Pharmaceuticals (SNTA) Drug trial suspended. Multiple broker downgrades. The daily double. Off to $1.31 from 52-week high of $10.30.

GE (GE) Cuts dividend. Falls to $8.40 from 52-week high of $38.52.

Ebay (EBAY) Concerns recession will hurt e-commerce. Sells down to $10.50 from 52-week high of $33.47.

TheStreet.com (TSCM) Financial advertising falling apart.  Down to $1.87 from 52-week high of $9.49.

Douglas A. McIntyre

TheStreet has cut some of its overhead costs, but to be cash flow positive it may have to make additional cost cuts. TheStreet has office space that it could sublease and potentially could close other offices. The company is trading near cash value and likely will not see a major fall in its stock price after this quarter’s earnings.

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