24/7 Media Low on Cash, Exploring Options

Ad network 24/7 Media Tuesday said that it is pushing back its fourth quarter and 2000 earnings announcement to look at “strategic alternatives” regarding its cash position.

Previously, the New York-based company was to have announced the results of its fourth quarter and full year ended Dec. 31 on Feb. 26, 2001. Now, that announcement will take place on March 21.

Postponement of company earnings disclosure is typically a bad sign for investors, and for 24/7 Media — which is running low on cash and marketable securities — the news it reveals in its March announcement likely will shed light on the company’s near-term survivability.

According to a statement released by the company, the rescheduled date will enable 24/7 Media to present investors with a “more definite” outlook for 2001, including an update on the company’s initiatives to improve its cash position.

A spokesman for 24/7 Media declined to elaborate on the company’s statement, but said only that the ad network is “looking at a lot of different options.”

Those options would presumably include wooing new investors to take a stake in the ailing advertising firm, or attempting to get debt financing.

Being acquired would also seem to be a possibility, as the Internet industry goes through massive consolidation. Potential buyers for the firm might include other online marketing firms interested in 24/7 Media’s technology and the more than 25 million email names it owns.

The final and least-attractive alternative, of course, would be filing for bankruptcy.

Late last year, the company said it was “aggressively” working to raise cash. That included $18 million it received through the sale of shares of chinadotcom and other, unspecified, “non-core” assets. The company also said that it would continue to work to sell off assets to ensure that its cash resources would help it reach cash break-even by fourth quarter 2001.

However, with only $23.1 million in cash and marketable securities at the end of September, it’s uncertain whether the firm will be able to find the cash or assets it needs to stay afloat — especially at its current burn rate.

In the third quarter, the company posted a pro forma loss of $22.5 million, or $0.59 per share (net loss was $56.8 million), while a headcount-reduction plan is expected to shave only about $20 million annually through the cutting of about 200 employees from the payroll.

In December, the company said it projected fourth-quarter revenue in the $48 million to $55 million range, and a loss of $0.39 to $0.44 per-share loss, roughly $14.9 million to $16.8 million. It did not give any indication of whether it would still meet those predictions.

Analysts expect the firm to post a loss of about $0.47 per share for the quarter, according to Thompson Financial/First Call estimates.

“The industry is in a difficult market environment, but we feel comfortable that 24/7 Media is working effectively to maximize our opportunities given the current market situation,” 24/7 Media chief financial officer Andy Johns said in December. Johns also described the firm as having an optimistic market outlook.

At press time on Tuesday, shares of TFSM were trading at $1.06, down 10.5 percent.