News
Jupiter posts disappointing 3Q06; Meckler cites “negative surprise”; Stock takes a hit
Alan Meckler, CEO of Jupitermedia Corporation (Nasdaq: JUPM), opened his comments about the company's 3Q06 calling the results "disappointing as a result of a negative surprise to management." That negative surprise came in the form of weaker than expected revenue from its images division's third party distributors. The company's profit from continuing operations plummeted from $43MM in 3Q05 to only $1MM in 3Q06. Not surprisingly, Jupiter's stock closed the day down $3.27 to $5.83, just slightly above its 52-week low of $5.75.
Neither Meckler nor his management team could explain the poor performance of the distributor network, a group of 320 third-party distributors or resellers of the company's image collections. The distributor network revenue came in at $1.1MM less than anticipated. Meckler speculated that this may be a result of the disintermediation of the business caused by the Internet, which eliminates the need for customers to go through distributors rather than purchasing directly from the owner (Jupiter,) though he believes the matter requires closer examination before he could determine the true cause. That theory makes sense in light of the improvement in direct revenue generated by Jupiter's sales staff. Direct sales in the US and Canada increased by 15%. Overall, revenue from the images division rose 9% from 3Q05 to 3Q06, to $26.2MM.
Meckler spoke briefly about the company' recently announced plans to increase its ownership in HAAP Media, the Hungarian photo community and micro-stock business, from the 47.8% share it bought in January to 90% by the end of this year. HAAP's micro-stock site, Stockxpert, has grown to 1 million dollar business with very little marketing. Jupiter plans to market this product more effectively now that it will be running the business.
Revenue from Jupiter's Online Media division was also weak, which Meckler attributed both to seasonality and to the fact that management has dedicated little investment in the division over the last three years. The company plans to add several dimensions to the online media business including two new trade shows - one dedicated to the web-video industry - next year with associated revenue-generating web-sites. (Meckler has a history of running successful trade shows.) The company will launch several other new web-sites as well, Meckler said, though he did not elaborate.
Click here to view the original press release.
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Related Stories:
Jupiter ups stake in micro payment stock photography sites (November 8, 2006)
Jupitermedia CFO, Chris Baudouin, announces resignation (October 24, 2006)
Jupiter Media posts weak second quarter results (August 9, 2006)
Jupiter launches micropayment stock photography site in Japan (July 20, 2006)
Stockxpert.com claiming strong growth (June 2, 2006)
Jupiter reports record sales for 1Q06 (May 11, 2006)
Jupiter reports on Q4 2005 (March 17, 2006)
Jupiter invests in Stock.xchng and Stockxpert (January 25, 2006)
Posted in: News, Stock Photo Companies
Comments(1)
post a comment »babs, November 10, 2006 [#]
It seems like a duh. Those third-party distributors may not have brand loyalty or position, and the marketing budget. Yet they’re competing with a plethora of new, worthwhile microstock providers ... look at that statement: “HAAP’s micro-stock site, Stockxpert, has grown to 1 million dollar business with very little marketing.” In my opinion, stock providers like HAAP and my new favorite LuckyOliver are offering the same quality for a whole lot less and bonus incentives. Their marketing must be working.
It’s working because BigAgency is outsourcing to people like me. We know cheap because we work for cheap. I recently landed a big behind-the-scenes job and my moneyed client was delighted that instead of spending $800 on a photo (their previous expenditure) we landed a stock photo for $3. The previous BigAgency never offered the option. And the client didn’t know the option existed.
So, this “disintermediation” is happening on multiple fronts as a result of not only the Internet, but as a result of New Media. NM and nontraditional marketing through blogs and such eliminates intermediaries in the business formerly known as ‘transaction between two parties.’
I like Jupiter, I just can’t afford them. Some of my clients can but it doesn’t mean they don’t enjoy choices.
The Disintermediated Outsource,
Babs