CNET's Value Proposition

There are very few companies with business models as close together as those of
CNET and TheStreet.com. Both are essentially networks of online publications with
revenues from advertising, subscriptions, and license fees. Both have had solid
revenue growth over the last couple of years. The market has not liked the fact
the CNET has guided that its 2006 revenue will be slower than anticipated. But,
it first quarter numbers were still up 17% to $84.3 million from the same period
a year ago. The company expects revenue of $88.5 million to $92 million in Q2
2006 last year the topline was $80.4 million.

CNET has an operating loss of $1.5 million in Q1. It forecasts a modest operating
profit of as much as $4.4 million in Q2.

CNET's business, then, appears relatively healthy and growing at a rate of about
15% year-over-year. It is also profitable in most quarters.

TheStreet.com has much lower revenue that CNET, but is growing faster, at least
for the time being. Revenue in the first quarter rose 43% to $11.1 million. Operating
profit hit $2.3 million.

TheStreet.com has a great deal of competition. MarketWatch. WSJ.com. Reuters.
The Motley Fool. The New York Times business section.

CNET would appear to have many fewer direct competitors. There are some well-
read online blogs on technology. The New York Times and BBC have tech sections,
but they are hardly as well-read as CNET, and the depth of the product reviews
the company provides is so broad that it does not really have competition.

The valuations of TheStreet.com is radically different, which opens the question of
whether one is overvalued or the other undervalued.

CNET trades at 3.2 times revenues according to YahooFinance! The company has a forward
PE of 26. The Street.com trades at 9.4 times revenue and has a forward PE of 21. CNET,
at $8.17 trades near its 52-week low and TheStreet.com, at $12.78 trades very near its
52-week high.

The market is likely to reconcile this kind of disparity over time, but its is likely that CNET's
shares will be viewed as undervalued over the course of the coming months, especially
if the company has a respectable Q2.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not
own securities in companies he writes about. He is a former board member of
TheStreet.com.