In looking at their dismal stock price (from a high of $136.00 per share 12/31/06 they hit a new low of 25 cents a share on December 11 this year) I ran across a bunch of filing with the SEC including their most recent quarterly statement dated 9/30/08 (http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0000950134%2D08%2D018938%2Etxt&FilePath=%5C2008%5C10%5C31%5C&CoName=PLANETOUT+INC&FormType=10%2DQ&RcvdDate=10%2F31%2F2008&pdf=). This is right before the launch (or should I say "sinking") of their new web site. What is interesting is that they seem to include events that happened after the new version was a launched. Buried down in all the legalese is a section where they must list "risk factors" that may affect their profitability. Here's what they had to say:
If we encounter technical difficulties, such as outages and slow or non-responsive system performance, with our Gay.com website or if the website lacks the functionality desired by our users, members and subscribers, our revenue will decline.
We recently converted the core website functionality of our flagship website, Gay.com, onto a new technology platform. During the re-launch of the Gay.com website, we experienced technical difficulties that resulted in downtime and suboptimal performance of the website. As a result of these technical difficulties, a few of our members and subscribers canceled their accounts and subscriptions with us. If we encounter further technical difficulties, and such difficulties result in continued or increased downtime on our Gay.com website, or if our users, members and subscribers do not like the new look, feel and functionality of our new Gay.com website, additional members and subscribers may cancel their accounts and subscriptions with us, advertisers may fail to initiate or renew their contracts with us and our revenue will decline.
Interesting stuff! The next section goes on to talk about causes and harms in loss of subscribers. Oddly enough, much earlier in the document they say they anticipate no significant change in the percentage of subscribers that they lose per year. I seriously doubt that will be the case and I'm really looking forward to reading their filing for the last quarter of 2008. It should have some interesting information on what's really going on at gay.com.
Another interesting tidbit; on August 11, 2008, they received notice from NASDAQ that they no longer met the minimum value to be listed on the exchange ($5 million). But it seems that the generally bad market has prompted NASDAQ to suspend that rule until January of 2009. At that point PlanetOut will probably be forced into over-the-counter trading.
Oddly enough the one thing they state definitively (most everything is tempered with "might" or "could") about dissatisfaction with the site is the presence of adbots:
We also believe that customer satisfaction has suffered
as a result of the presence in the chat rooms of our websites of adbots, which
are software programs that create a member registration profile, enter a chat
room and display third-party advertisements.
Which is really pretty funny considering that despite all their technological efforts to curb adbots in the chat rooms, the bots were back within a week of the launch of the new site. So they've done nothing to improve customer satisfaction by protecting the rooms from adbots, but have done much to decrease customer satisfaction by breaking all of the great 3rd-party programs that made gay.com chat worthwhile.
There's a lot of talk in the report about a possible sale of the entire company. I really do think I'll spend a few bucks and buy some shares at this bargain basement price, even if only for a laugh.
