Wall Street Appreciates United Online Move on FTD
Aug 05, 2012 (Menafn - Daily News - McClatchy-Tribune Information Services via COMTEX) --Wall Street certainly put a positive spin Thursday on United Online's planned spinoff of its iconic floral brand FTD.
The Woodland Hills-based company's stock, which is traded on the NASDAQ exchange under the symbol UNTD, soared 1, or 24 percent, to close at 5.20.
That seems to reflect the consensus shareholder opinion that the components of the company are worth more separately than lumped together.
That's what United Online chairman, CEO and president Mark R. Goldston told executives in a conference call Wednesday to discuss third-quarter earnings and the bust-up plan.
The company has an e-commerce division led by FTD, a Content & Media unit and the Communications business that consists of the Internet service providers NetZero and Juno.
"While the breadth and strength of our businesses had served our stockholders well for many years, we believe that it's currently in the best interest of United Online and its stockholders to separate these distinct businesses," Goldston said, according to a transcript of the call.
The plan calls for FTD to become a publicly traded company sometime in the first quarter of next year.
United Online will remain a publicly traded company consisting of the Communications segment and Content & Media, which includes the Memory Lane, Classmates and MyPoints websites.
The plans will evolve in the coming months, Goldston told analysts.
Mike Crawford, an analyst for Newport Beach-based B. Riley & Co. Inc., thinks the plan is a good idea.
"In my opinion, the company, as currently structured, is not getting the credit for the value of its various components," he said, referring to the stock price. "We believe this valuation fails to account for the solid e-commerce business that is FTD."
Goldston might have a bigger spin in store for the company.
He also said that directors are "reviewing strategic alternatives" for the Content & Media and Communications businesses.
That's boardroom speak for spinoffs, sales or combination of both.
Goldston also said the company hopes to increase stockholder value through its portfolio of about 75 patents and patent applications. This could be done via a sale, licensing process or combination of both, he said.
United Online had a solid second quarter. In the April-June period it earned net income of 8.5 million, equal to 9 cents a share, down from 14.8 million, or 16 cents a year ago.
Revenue declined to 231.9million from 255.6million a year earlier.
But during the quarter the company also made a 17 million debt payment ahead of schedule.
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