SAN FRANCISCO--(BUSINESS WIRE)--July 14, 2004--
Expected to Be Accretive to Cash from Operations in 2004 and
Accretive to EPS in 2005
CNET Networks, Inc. (Nasdaq: CNET) today announced that it has
signed a definitive agreement to acquire privately-held Twofold
Photos, Inc., and its Webshots Web site (www.webshots.com). Webshots
is the leading Web site in the photography category(1), and it boasts
the largest publicly available collection of shared photo content.
Under the terms of the agreement, CNET Networks will pay $60 million
in cash and $10 million of deferred consideration. The transaction is
expected to close in the third quarter of 2004.
Webshots adds to CNET Networks' market-leading portfolio of
properties, and enhances the company's position as a premier global
interactive content company that informs, entertains, and connects
large, engaged audiences around topics of high information need and
personal passion. In turn, CNET Networks can further enhance Webshots
with relevant content - such as digital camera reviews, help and
how-to's, and shopping services - from its world-class sites such as
CNET.com.
Since its launch on the Web in 1996, Webshots has amassed by far
the largest publicly available collection of photo content, with 58
million images and more than 300,000 new photos uploaded daily. More
than 14 million people visit the Webshots community each month to
browse, share and engage with fellow users about photos in a range of
categories, such as travel, sports and recreation, birthdays, and
weddings; activities that generate over 20 million average daily page
views(2).
While the Webshots and CNET Networks audiences share a passion for
the digital lifestyle, the audiences are largely unduplicated.
Together, the companies add significant reach and impression inventory
for CNET Networks' marketing partners. With the addition of such
significant scale, advertisers both inside and outside of the
technology and consumer electronics industries will be able to expand
their marketing efforts with CNET Networks. Webshots' primary revenue
stream is advertising with additional contribution from subscriptions
and the sale of prints and other photo merchandise.
"Our acquisition of Webshots is an outstanding example of
strategically investing in assets that allow us to continue to fuel
the growth of CNET Networks," said Shelby Bonnie, chairman and chief
executive officer of CNET Networks.
"Webshots is a market leader with a large, passionate audience
that complements the other market-leading properties in our personal
technology, and games and entertainment categories, like CNET.com,
Download.com, GamesSpot and MP3.com. We see a significant growth
opportunity in emerging digital lifestyle categories and we are well
positioned with high quality properties that have the scale to satisfy
both our users and marketing partners," Bonnie added.
The Internet has enabled digital photo sharing to become a killer
personal technology application, with significant growth
opportunities. Digital cameras now reside in 39 percent of U.S.
households, and unit sales are expected to increase by more than 30
percent this year(3). In addition, digital camera owners take a lot
more pictures than they did when shooting with film, and Webshots
provides the venue for them to share those pictures with the world. In
fact, about half of Internet users don't print any of their digital
photos(4).
"CNET Networks is the leading interactive content company with a
history of building engaging environments for passionate users and a
marketing infrastructure that will take our business to a higher
level," said Narendra Rocherolle, founder and co-CEO of Webshots. "We
are excited to work with the CNET Networks team to continue to
innovate for our users and to grow Webshots.com."
Financial Highlights
Given the inability to predict the actual closing date, management
is not providing any estimates of contribution from Webshots to its
third quarter results. The company expects that Webshots will
contribute approximately $3.2 million and $3.7 million in revenue, and
$1.7 million to $2.0 million in operating income before depreciation
and amortization in the fourth quarter of 2004. As a stand-alone
entity, Webshots is expected to generate revenues of $12 million to
$13 million and operating income before depreciation and amortization
between $6.75 million and $7.25 million for the year ending December
31, 2004. For the year ending December 31, 2005, management expects
Webshots total revenues to grow between 30 percent and 35 percent from
the prior year.
CNET Networks expects the transaction to be accretive to cash from
operations in 2004 and accretive to earnings per share in 2005. CNET
Networks will be providing updated guidance for the remainder of 2004
in its second quarter earnings release today.
Conference Call and Webcast
CNET Networks management will host a conference call to discuss
its second quarter financial results and acquisition of Webshots
beginning at 5:00 pm ET (2:00 pm PT), today, July 14, 2004. To listen
to the discussion, please visit http://ir.cnetnetworks.com and click
on the link provided for the webcast conference call or dial (800)
344-1035 (international dial-in: (706) 679-3076). A replay of the
conference call will be available through July 28, 2004 via webcast at
the URL listed above or by calling (800) 642-1687 (international
dial-in: (706) 645-9291) and entering the conference ID number
8488413. The company's past financial news releases, related financial
and operating information, and access to all Securities and Exchange
Commission filings, can also be accessed at
http://ir.cnetnetworks.com.
Safe Harbor
This press release and its attachments include forward-looking
information and statements that are subject to risks and uncertainties
that could cause actual results to differ materially. These
forward-looking statements include statements regarding the company's
expected financial results related to its acquisition of Webshots and
Webshots' expected stand-alone financial results, as well as other
statements throughout the release that are identified by the words
"expect," "estimate," "target," "believe," "anticipate," "intend" and
similar expressions. These statements are only effective as of the
date of this release and we undertake no duty to publicly update these
forward-looking statements, whether as a result of new information,
future developments or otherwise. The risks and uncertainties include:
the risk that closing conditions will not be met and that the
acquisition will not close, a lack of growth or a decrease in
marketing spending on Webshots website; the failure of existing
advertisers to meet or renew their advertising commitments; the loss
of marketing revenue and users to Webshots' competitors; loss of users
or customers by Webshots following its acquisition by CNET Networks,
which could result in lower than expected revenue and operating
income; failure of CNET Networks to successfully integrate Webshots'
operations, which could result in increased expenses or loss of
revenues; For general risks about CNET Networks' business, see its
Annual Form 10-K for the year ended December 31, 2003 and subsequent
Forms 8-K, including disclosures under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are filed with the Securities and
Exchange Commission and are available on the SEC's website at
www.sec.gov.
About CNET Networks, Inc.
CNET Networks, Inc. (www.cnetnetworks.com) is a premier global
interactive content company that informs, entertains, and connects
large, engaged audiences around topics of high information need and
personal passion. The company focuses on three categories -- personal
technology, games and entertainment, and business technology - and
includes such leading brands as CNET, ZDNet, TechRepublic, MP3.com,
GameSpot, CNET Download.com, CNET News.com, Computer Shopper magazine,
and CNET Channel. With a strong presence in the US, Asia and Europe,
CNET Networks has operations in 12 countries.
(1) Neilsen//NetRatings' June 2004 U.S. data
(2) Numbers in this paragraph are based on CNET Networks internal
tracking and/or Webshots internal logs.
(3) March 2004, Consumer Electronics Association's CEA Market
Research
(4) 2004 InfoTrends/CAP Ventures report
CONTACT: CNET Networks, Inc.
Investor Relations Contact:
Cammeron Finnegan McLaughlin, 415-344-2844
cammeron.mclaughlin@cnet.com
or
Media Contact:
Sarah Winterhalder, 415-344-2218
sarah.winterhalder@cnet.com
SOURCE: CNET Networks, Inc.
