Poetic Portfolios

On Monday, the company formerly known as Jupitermedia, WebMediaBrands (NASD: WEBM), announced their agreement to sell their internet.com division to QuinStreet, Inc. for $18 million. For anyone following this story, you know that Jupitermedia sold their images division to Getty images for $96 million earlier this year. I’m left to wonder what’s left.

Apparently WebMediaBrands will continue to operate its online business, which consists of Mediabistro.com, Graphics.com, and related job boards, online education offerings and trade shows. I’m not sure what that amounts to from a revenue and earnings perspective. I do know that the $18 million sale price was the approximate market capitalization of the entire company as of Friday. After the announcement, the company is valued at $22.4 million.

On the surface, it would appear that if the remaining business was worth anything, the company is severely undervalued. However, cash in the hands of this management team is a scary thing. I covered a little bit of the history of this company last year. They have unloaded core businesses in the past, only to make investments that only eroded shareholder value.

The company has acted more like a private equity firm focused on web media than an operating entity. It’s as if the company’s management is more focused on buying and selling businesses than operating them.

What remains of WebMediaBrands will be a company they purchased in 2007 for $20 million in cash. Eventually some bolt-on acquisitions were made to compliment this business. The market seems to be valuing this purchase and smaller subsequent acquisitions at about $4.4 million. I’ve been interested in this company for a while as a value play, believing that cash generation, debt repayment, and cash on hand would eventually lead to a higher share price. Cash generation is no longer a story here, and cash value/book value is no longer appealing either. I plan to sell WebMediaBrands over the next week or so.

Disclosure: I hold shares of WebMediaBrands.

Related Entries WebMediaBrand’s Second Quarter 2009 Jupitermedia Analysis and Valuation A Word on My Preferred Asset Class and Some Lessons Learned The New Jupitermedia Sale of Select Comfort

This entry was posted on Tuesday, August 11th, 2009 at 9:54 am and is filed under WebMediaBrands. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.