Why We Sold Search Engine Strategies

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I presume you have read the news that we signed an agreement today to sell our Search Engine Strategies trade shows along with our ClickZ network of Web sites?

Why the sale? The simple reason is that Jupitermedia has evolved from being a media company with images into an Image company with media. A good part of the evolution came from the acquisition of 7 image companies since June 2003. Over a 25 month period we have spent close to $200 million making the above referenced acquisitions along with dozens of photo library collections. Most of these deals were done with cash. The cash came from our treasury and from bank borrowings. We plan to make more acquisitions and we plan to continue using cash. So how do we get more cash? Simple, we either go to the public market and offer our stock for cash or we sell assets such as the Search Engine trade shows and ClickZ network in order to raise more funds for acquisitions.

Recently I would have been prone to go to the public market and sell equity to raise cash. But even with our stock closing price yesterday of $22.80, I think Jupitermedia was undervalued based on what I believe the company will be worth over the coming years. So I chose asset sales and additional borrowing based on the fact that I think Jupitermedia should be more valuable tomorrow. Of course I cannot guarantee that this scenario will play out as planned, but then I am the major stockholder and feel that the decisions I reach effect me more than any other stockholder --- thus I do not take such decisions lightly.

So there it is. Now you know the reasoning behind the sale of some superb assets. In business one has to constantly make evaluations and calculations about a variety of issues ranging from business direction to personnel. In this case I believe I made the right decision to sell some assets, avoid stock dilution, and dramatically grow our JupiterImages division. Hopefully all of our stockholders will applaud this thinking in the coming months.

7 Comments

George Hamil said:

Nice..... way to go sparky. Why the 15% drop in stock? I am hoping it was just market manipulation so the big boys could get in cheap. If it continues tomorrow, it's probably a long-term downward trend.

SES lover said:

You've made a huge mistake. SES and ClickZ.com were your lifeblood. JupiterMedia is not an Images company - it's a media company - images are merely a form of media.

What's next? Are you going to sell DevX and Earthweb too? Let the shareholders vote on this.

Michael Mo said:

I believe this is the right strategy. I have held the stock from ~$10. Looking forward to $30. The focus on Image Biz with low inventory and high scalability is the right one. The next question is, what are you going to do with Jup Research?

Baron said:

Congrats on the sale! Can you share how the $43M was split between the trade show and the ClickZ network? And also, what sort of earnings multiple does that work out to be for each?

Not a Jupiter shareholder, but I think you made a good move. Would seem that there is nothing that provides more bang-fot-the-buck than a business that is heavy in IP assetts; spiritually, at least, I am long on Jupiter.

Mac McCarthy said:

Seems like a smart move, and well explained. I was stunned when I saw the *margins* for the photo business! Zowie! Two-thirds vs. one-third!

I am holding onto *my* stock.

Stocker said:

Will Jupiter Images move in on the photographer submitted stock Sites with the business models similar to Shutterstock or Can Stock?

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