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FriendFinder Networks AŞ Message Board

  • investora2z investora2z Jul 17, 2013 12:18 PM Flag

    Looks really bad

    Years of losses have led to continuous declines in the stock. The revenues have also declined continuously over the past few years and quarters, though the net loss decreased from $13 million to $10.4 million in the last quarter. The biggest problem is the huge debt on books of $504 million. The cash is only $31 million, and the cash flow is not enough to service the debt. All this negativity surrounding the stock may take a lot of time to go away, if it ever does. With a cash flow situation like this, restructuring of debt becomes difficult, and that leads to other related negative effects. There are several companies in related segments which are incurring losses, but are better off because they have little or no debt. Further, the revenue growth in most such companies is also slowing down, but the bottomline performance is relatively better. FFN needs to improve the margins significantly so that the sentiments show some improvement. Further, it needs to get the revenue growth going soon. Currently, the decline in revenues is partly part of the strategy of the company to focus on profitable segments. However, there may not be enough room for reduction in growth as the company needs to maintain a minimum amount of mass, to meet its fixed costs etc. Growth is not easy as the company has formidable competitors, and the space is crowded with regional and global players. New ideas are coming up all the time, and the company has to upgrade and adapt continuously. Social networking is expanding rapidly and sub-segments are experiencing even faster growth. For example, IZEA (IZEA) is in the social media sponsorship space, which is a segment with a lot of potential. FFN has the potential to do much better, but it has to do something magical very quickly. It needs to find friends for itself, otherwise the outlook may get even worse.

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