TheStreet.com looks at possible sale
Published: 17 Feb 2000 11:27 GMT
TheStreet.com has hired investment bank Wasserstein Perella & Co. to explore strategic alternatives, including a possible sale of the company, say people familiar with the matter.
In recent days, TheStreet.com, which offers financial-market reports and commentary, has been shopped to other Internet companies, according to one person familiar with the matter. Another person said TheStreet.com, with a market valuation of nearly $400m (£244m), had been approached by a would-be acquirer.
It couldn't be determined what premium, if any, buyers would be willing to pay for the company, which has been struggling to work out its business model. Web portals and other media companies are considered potential buyers.
A spokesman for TheStreet.com (www.thestreet.com), New York, declined to comment. A Wasserstein spokesman also declined to comment.
TheStreet.com went public last May at $19 a share amid much fanfare, with its stock more than tripling on the first day of trading, to $60 a share. Amid stiff competition from rivals such as MarketWatch.com, TheStreet shares have fallen, trading at $16 each Tuesday at 4pm on the Nasdaq Stock Market.
Analysts say part of TheStreet.com's stock weakness is a reaction to the company's strategy to charge a premium price compared with its competitors. Currently, the site charges an annual subscription fee of $99 for much of its information, which analysts say has alienated some users who aren't interested in paying for information they could find elsewhere. Last month, TheStreet.com announced plans to make information on the site free and also start a new, paid site called RealMoney.com devoted to commentary. Those plans are scheduled to take effect in the second quarter.
"Some investors are taking a wait-and-see approach," says Gordon Hodge, an analyst at Thomas Weisel Partners in San Francisco.
TheStreet.com has also had management difficulties. Last year, Chief Executive Kevin English resigned after a year on the job and was replaced by Thomas J. Clarke, who had been at the company for a matter of weeks.
TheStreet.com, founded in 1996 by hedge-fund manager James J. Cramer and Martin Peretz, the chairman of the New Republic, has attracted investments from companies including New York Times Co. and venture-capital firms Flatiron Partners and Oak Investment Partners. One of the site's selling features has been its sharp commentary from writers including Cramer and Herb Greenberg, formerly a columnist with the San Francisco Chronicle.
Analysts believe the new two-site model will draw more users to the free home page, which will enable TheStreet.com to boost advertising. Hodge reckons that serious users will pay the $200-a-year fee to access RealMoney.com. He estimates that TheStreet.com's revenue will reach $33.4m this year, up from $14.3m last year. The company is expected to post a loss of about $47.5m, or $1.86 a share, compared with a loss of $33.6m, or $1.73 a share, last year.
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