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CNet Also On The Block

Posted on Wednesday, Feb 22nd 2006

Content deals are hot.

I wrote about iVillage earlier. CNet is also an acquisition target. Rafat Ali reports that CNET Networks has hired investment banker Zander Lurie from J.P. Morgan Chase & Co. Lurie, who advised Internet companies on M&A at J.P. Morgan, will be a senior VP for strategy and development at CNET.

Let’s take a look at CNet’s financials.

They did ~$350 Million in revenues in 2005, a decent 120% growth over 2004. Since 2004, they have also started being profitable. Things have certainly started looking up.

To build this company, however, has been an uphill task. Between 1995 and 2003, CNet lost $2.5 Billion. 1998 and 1999 were profitable years, and at the height of the boom, they made a net profit of $417 Million in 1998. But the most severe downturn years ’00 – ’02 have been terribly challenging.

Stock Price has been a dizzying roller-coaster ride, with an all-time high of $79.88 in 1999, to a frightening 60 cents in 2002.

At the moment, CNet has a good $2 Billion market cap, and a stable mid-teens stock price. With a premium, a deal price will probably amount to about $2.5 Billion.

Today’s content businesses, I am sure, will have it a lot easier. However, CNet and iVillage are pioneers of the pure content business model. They deserve a lot of applause for sticking it out.

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