SAN FRANCISCO, Aug 2, 2004 (BUSINESS WIRE) -- CNET Networks, Inc.
(Nasdaq:CNET) today announced the completion of its acquisition of
privately-held Twofold Photos, Inc., and its Webshots Web site
(www.webshots.com), for $60 million in cash and $10 million of
deferred consideration. Webshots is the leading Web site in the
photography category(1), and has amassed the largest publicly
available collection of photo content, with 66 million images and more
than 300,000 new photos uploaded daily.
This transaction adds a large and passionate audience -- over 14
million unique visitors per month viewing 20 million pages per day(2)
-- to CNET Networks' industry leading properties in the personal
technology and games and entertainment categories. In addition, CNET
Networks has the ability to leverage content from its existing
properties to further enhance the Webshots user experience.
Together, the companies add significant reach and impression
inventory for CNET Networks' marketing partners. CNET Networks has the
ability to leverage its existing resources and sales structure to
provide additional advertising opportunities to its current set of
customers in the technology and consumer electronics industries, as
well as broaden its growing base of high-quality consumer advertisers.
"The Webshots transaction is a solid illustration of CNET
Networks' continued focus on growth, and on building its leadership
position in the digital lifestyle category. By adding Webshots to our
portfolio of leading Web sites, we are significantly expanding our
audience reach, and providing attractive advertising opportunities for
both new and existing marketing customers," said Shelby Bonnie,
chairman and chief executive officer of CNET Networks.
CNET Networks previously announced financial highlights related to
the Webshots transaction in its second quarter earnings release on
July 14, 2004. Given the timing of the transaction close, as well as
integration expenses and seasonality, the company continues to believe
that Webshots will have a modest impact on CNET Networks' third
quarter financial results. Accordingly, the company is not changing
its previously announced guidance for the third quarter. CNET Networks
plans to provide actual results for Webshots as part of its third
quarter earnings announcement. The company continues to expect that
Webshots will contribute $3.2 million to $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 was expected to generate
revenues of $12 million to $13 million and operating income before
depreciation and amortization of 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
continues to believe that the transaction should be accretive to cash
from operations in 2004 and accretive to earnings per share in 2005.
Please refer to the "Business Outlook" section of CNET Networks'
second quarter 2004 financial results press release for a detailed
overview of guidance for the third quarter and full-year 2004.
Safe Harbor
This press release includes forward-looking information and
statements within the meaning of the federal securities laws. These
forward-looking statements include without limitation statements
regarding the company's expected financial results related to its
acquisition of Webshots and Webshots' expected stand-alone financial
results. 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 the benefits of Webshots' acquisition by CNET Networks
will not be achieved or will take longer than expected; 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; the loss of users or customers by Webshots following its
acquisition by CNET Networks, which could result in lower than
expected revenue and operating income; or the 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 or
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.
SOURCE: CNET Networks, Inc.
CNET Networks, Inc.
Cammeron McLaughlin, 415-344-2844 (Investor Relations)
cammeron.mclaughlin@cnet.com
Martha Papalia, 617-225-3340 (Media)
martha.papalia@cnet.com
