Is TheStreet.com (TSCM) Ripe For A Buy?
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Last night, TheStreet.com (Nasdaq: TSCM) reported Q4 earnings of breakeven while falling short on the analyst revenue view. The theme of the conference called was basically things are tough and are not improving, but it has a pristine balance sheet.
Merriman Curhan Ford published a report and noted that TheStreet.com has a cash balance of approximately $2.27 per share, but the stock is currently trading at $2.18, below its cash value. Merriman believes that the company will remain EBITDA and free cash flow profitable in FY09, preserving the cash balance mentioned above. Merriman does not believe TSCM's share price reflects the value of the company's assets. Merriman's likes TheStreet.com's strong brand, 8 million monthly unique users and nice recurring revenue streams.
Even though there are tough waters ahead for the TheStreet.com, I'd say this stock should trade higher six months from now. TheStreet.com has to be cash flow positive to preserve its healthy cash horde that it raised from Technology Crossover Ventures. On another note, it was surprising that none of the analysts on last night's call asked why Technology Crossover Ventures Managing Director resigned from TheStreet's board.
To be cash flow positive, TheStreet will have to cut more than the 6% in costs than it already eliminated. TheStreet needs to consolidate office space and sublease any unused space.
Investors looking to buy the TheStreet's stock may be hoping that some larger company comes acquire TheStreet and its various assets. Obviously, TheStreet's top attraction is its media personality, Jim Cramer. However, on any "Change of Control", Jim Cramer has the right to leave the company and receive a cash payment equal to three times his salary. That one clause could detour any interested buyer.
On a positive note, TheStreet is restructuring some of its executive contracts which will help reduce costs at the company. TheStreet did say it will have further cost reductions that will help it achieve positive cash-flow. Finally, with TheStreet's pristine balance sheet, many are speculating that TheStreet will increase its dividend. These are definitely tough times for TheStreet, but it made it through tough times once before, and I expect it will again.
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Merriman Curhan Ford published a report and noted that TheStreet.com has a cash balance of approximately $2.27 per share, but the stock is currently trading at $2.18, below its cash value. Merriman believes that the company will remain EBITDA and free cash flow profitable in FY09, preserving the cash balance mentioned above. Merriman does not believe TSCM's share price reflects the value of the company's assets. Merriman's likes TheStreet.com's strong brand, 8 million monthly unique users and nice recurring revenue streams.
Even though there are tough waters ahead for the TheStreet.com, I'd say this stock should trade higher six months from now. TheStreet.com has to be cash flow positive to preserve its healthy cash horde that it raised from Technology Crossover Ventures. On another note, it was surprising that none of the analysts on last night's call asked why Technology Crossover Ventures Managing Director resigned from TheStreet's board.
To be cash flow positive, TheStreet will have to cut more than the 6% in costs than it already eliminated. TheStreet needs to consolidate office space and sublease any unused space.
Investors looking to buy the TheStreet's stock may be hoping that some larger company comes acquire TheStreet and its various assets. Obviously, TheStreet's top attraction is its media personality, Jim Cramer. However, on any "Change of Control", Jim Cramer has the right to leave the company and receive a cash payment equal to three times his salary. That one clause could detour any interested buyer.
On a positive note, TheStreet is restructuring some of its executive contracts which will help reduce costs at the company. TheStreet did say it will have further cost reductions that will help it achieve positive cash-flow. Finally, with TheStreet's pristine balance sheet, many are speculating that TheStreet will increase its dividend. These are definitely tough times for TheStreet, but it made it through tough times once before, and I expect it will again.
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