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08|11|2007 08:55 am EDT

Marchex stock drops to $9.00

by Frank Michlick in Categories: News

On top of the series of announcements, Marchex also had their earnings call on August 9th. When trading resumed the following morning, the stock had fallen by 22% – to $9.00. By the end of the trading day, the stock was trading at $9.47. Here are some of the possible reasons from their second quarter financials:

Revenue: Marchex anticipates 2007 Revenue of $136 million to $142 million. Adjustments from our prior guidance of $144 million to $150 million are based on:

  • a loss of $500,000 in revenue during the second quarter resulting from the datacenter outages;
  • a $500,000 anticipated revenue increase from the VoiceStar acquisition;
  • a $4 million decrease resulting from an anticipated reduction in Web site marketing;
  • a $4 million decrease in revenue based on our increased direct monetization of our proprietary Web sites and impact from Yahoo!’s quality-based pricing initiatives.

Adjusted operating income before amortization: Marchex anticipates 2007 adjusted operating income before amortization of $21 million to $25 million. Adjustments from our prior guidance of $34 million to $38 million are based on:

  • a $1.1 million decrease in adjusted operating income before amortization from our second quarter results due to the increased investment in our advertising services platform for local advertisers plus datacenter outage impacts;
  • the $4 million increased investment in the accelerated build out of our advertising services platform for local advertisers we provide to partners like AT&T and other aggregator partners, as well as supporting potential new relationships;
  • a $3 million investment in accelerating the product and infrastructure build out for VoiceStar, as well as the initial integration with Marchex’s advertising services platform;
  • a $1 million decrease resulting from an anticipated reduction in Web site marketing;
  • a $4 million decrease based on direct monetization of our proprietary Web sites and impact from Yahoo’s quality-based pricing initiatives.

Adjusted EBITDA: For adjusted EBITDA, Marchex anticipates add-backs of approximately $8 million in additional depreciation and amortization to its adjusted operating income before amortization range, implying an adjusted EBITDA range of $29 million to $33 million. Our prior guidance on add-backs to adjusted operating income before amortization was approximately $7 million in additional depreciation and amortization.

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[The author of this article owns a small amount of Marchex stock.]

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