Merriman Thinks TheStreet.com (TSCM) Presents A Good Buying Opportunity

Merriman thinks TheStreet.com (Nasdaq: TSCM) presents a good buying opportunity and reiterates its Buy rating. TheStreet.com reported poor results today (as noted last week could happen), but Merriman blames the shortfall on TheStreet.com's Promotions.com and Merriman thinks TheStreet will correct it in upcoming quarters. Merriman said the shortfall happened because the Promotions.com team was focused on internal projects. That is also what TheStreet.com said last quarter. Here is what TheStreet.com said on the conference call last quarter.

"With respect to Promotions.com, interactive marketing services revenue totaled $2.7 million in the fourth quarter. The Promotions business was impacted in the fourth quarter by our decision to temporarily turn many of its technical resources toward the internal projects we had underway which are critical to our success in 2008. The Promotions team took over the leadership of TheStreet.com redesign at a critical juncture in the project and led us to a successful relaunch of the site on time and on budget. The team also led the redesign of Stockpickr and the development of MainStreet, effectively leveraging a common technology platform while ensuring that both sites launched on time and on budget.

One of the key strategic reasons for acquiring Promotions.com was to allow us to employ their technical expertise at times when it was most needed and we are extremely pleased with the results of their efforts. As we move past these critical launches, the Promotions team is again focused on external growth to capture the significant opportunity in the interactive marketing services space and recent marketing and rebranding initiatives are already bearing fruit in that regard."

So the TheStreet.com said Promotions.com was again focused on growth in '08, but the conf call today blamed some of the shortfall on Promotions.com team spending '08 building the TheStreet's website. Perhaps, instead of buying the company, TSCM should have just hired its web designers. :-) But, we do think Promotions.com is in a good spot and should have good long-term growth as long as they execute and go after the Fortune 100.

Our senior analyst, Guy Baron, thinks the shortfall had more to do with TheStreet.com's new site not doing as well as forecasted. [G]

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