Paramount Global (PARAA) 2003 Q4 法說會逐字稿

Good afternoon.

My name is Michelle, and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the CNET Networks fourth quarter financial results conference call.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer period.

If you would like to ask a question during this time, simply press star then the number one on your telephone key pad.

If you would like to withdraw your question, press the pound key.

Thank you.

Ms. Finnegan, you may begin your conference.

Thank you and good afternoon.

Before we begin our formal comments, I will like to remind you that in our financial news announcement released today, and also on this call, CNET Networks is providing specific forward-looking statements, including guidance related to our expectations of future financial performance.

Any forward-looking statements made as part of our financial news today are subject to risks and uncertainties that could cause actual or predicted results to differ materially.

These risks are outlined in our fourth quarter news announcement, as well as in the company's Securities and Exchange Commission filings, including its 10K for the year 2004 and its 10Q for the quarter ended December 30th, 2003, which can be obtained from the SEC's website or directly from our investor relations department.

After this conference call, CNET Networks does not expect to provide further guidance until our release of financial results for the fourth quarter ending March 31, 2004.

Our company also adheres to a quiet period that begins after the second month of each quarter and ends following the release of that quarter's financial results.

If we decide to update our financial guidance, we will disseminate the information either by news release or other similar communications methods that meet regulation FC guidelines.

Last but not least, you can find a reconciliation of the non-GAAP financial measures that we use in our news release and on this call to GAAP financials on the last page of today's news announcement, as well as on our investor relation website, ir.cnet.com.

Hosting today's call are Shelby Bonnie, CNET's Chairman and Chief Executive Officer, and Doug Woodrum, our Chief Financial Officer.

Now let me turn the call over to Shelby.

Thanks, Cammeron, and thank you everyone for joining us.

We ended 2003 on a very positive note, with our business continuing to strengthen throughout the year.

This culminated into a fourth quarter where we saw strong growth in user and pages in revenues and in profits.

Total revenues were $73.5 million in the fourth quarter, up 8% from the fourth quarter of 2002.

Internet remains our strongest growth engine.

Our core internet business revenue was up 16% from the fourth quarter of last year, compared to a 10% increase in the third quarter and 6% increase in the second quarter.

Print revenues continue to decline, largely due to lower custom publishing revenue.

Operating income before depreciation and amortization was $13.2 million in the quarter.

On the marginal dollar revenue generated in the fourth quarter over the third quarter, we dropped 78 cents to the bottom line.

Net income was $6.9 million or 5 cents per share.

Overall, it was a very good quarter.

The environment is clearly improving.

We are showing growing momentum on the revenue side and the ability to drop those improvements to the bottom line.

With that, let me turn it over to Doug, who will cover the financial highlights.

Thank you, Shelby.

As mentioned, the fourth quarter highlights CNET's continued growth in revenues and profits and positions us for significant growth going into 2004.

Importantly, the fourth quarter again demonstrates our ability to translate revenue growth into operating profits.

Fourth quarter revenues of $73.5 million were up 8% over last year.

And this is $2.5 million above the high end of our guidance range, which was between 68 and $71 million for the quarter.

Looking at our primary components of revenue, internet and publishing: During the fourth quarter internet revenues of $61.9 million increased 16% compared to last year, and publishing revenues of $11.6 million were flat from the prior quarter and down year over year, in line with our expectations for quarter.

The expanding growth rate of internet revenues, which have increased 6%, 10% and now 16% over the previous three quarters, highlights the strengthening value of online marketing to our customers and of our audiences represented across all of our content offerings.

On a full year basis, revenues equaled $246.2 million, representing $197 million of internet revenues, up 7%, and $49.3 million of publishing revenues, down 8%.

Our operating loss was $20.8 million, compared to an operating loss of $381.3 million in 2002; and our operating income before depreciation and amortization was a positive $2.8 million, compared to a $30.4 million loss in 2002.

Also, as you can see from today's statistical highlights page, we were introducing a new view of revenue distribution, which really better matches how we focus on revenue growth from today's products, as well as products created going forward.

The new revenue categories are marketing services, representing impression-based and activity-based on-line advertising; licensing fees and user revenue, representing the licensing of our product databases, our online content, subscriptions to on-line services, as well as other paid services.

And finally publishing, represented our U.S. and international magazines, as well as custom publishing.

We provided a historical view these revenue categories to help you visualize the trends during the past year, as well as include the old revenue distribution information.

Beginning with Q1 2004, we will be focusing only on the new revenue categories.

During Q4, we experienced strong growth in both marking services, up 15%, and licensing fee and user revenues, up 18%.

Growth in these areas fueled a total internet growth rate, as mentioned, to 16% for the quarter.

Within publishing, revenues were impacted by reduced custom publishing revenues, as anticipated.

And from the view we have today, it's likely custom publishing revenues may continue to decline over the next several quarters, which has been factored into today's Q1 and full year guidance.

Also, in reviewing the relevancy of certain of our nonfinancial statistics, we've made adjustments by including the measurement of average daily page views.

Now having a view of our unique user count, which was up 20% year over year, our paid leads, which were up 63% year over year, and now average daily page views, up 40% year over year, helps provide insight into these indicators of our expanding audiences and their usage.

But separately, we no longer are including daily downloads, Gamespot complete subscriptions, and data source licenses.

While these activities and measurements are important to certain aspects of performance, we believe these statistics are really less relevant to the overall health and future growth opportunities, which are really better portrayed by the new revenue categories and our user count and their associated usage statistics.

Moving down to the P&L, to operating expenses and income, our cash operating expenses -- $60.3 million -- were down 3.5 million or 5% from the year ago quarter, which represents another quarter of solid execution and continued productivity improvements.

The combination of higher revenues and continued cost improvement during the fourth quarter resulted in operating income before depreciation and amortization as mentioned of $13.2 million, an 18% margin, which is above our guidance range, which was of operating income before depreciation and amortization of 10.5 to $12 million, and above last year's comparable amount of $4.2 million.

These results highlight our ability to translate revenue growth into higher profits and higher profit margins.

Net income for the fourth quarter equaled $6.9 million, or 5 cents per share compared to $3.5 million or 3 cents per share in the year ago quarter.

And the year ago quarter included 7 cents of net income from nonrecurring items, principally the repurchase of convertible debt at a discount.

Our fourth quarter EPS of 5 cents came in better than our guidance range, which was 2 and 3 cents of the quarter.

During the fourth quarter, our top 100 customers represented about 60% of total revenue, which is similar to previous quarters.

And we continue to experience a very high renewal rate from our top advertisers.

During Q4, 96% of our top 100 U.S. advertisers renewed with us compared to Q3.

Turning to the balance sheet, our cash position at the end of the fourth quarter equaled $136.3 million, which is down $1.3 million from the previous quarter.

The decrease reflects the seasonality of collecting year end billings from advertising agencies.

As a result, our day sales outstanding equalled 67 as of December 31 -- up from 64 as of September 30, but down from 74 a year ago.

Our capital expenditures in the fourth quarter came in at $3.9 million, or $400,000 higher than originally planned.

This reflects a decision to modestly accelerate the purchase of a few capital items.

Overall, our full year 2003 capital expenditures came in at $11.7 million, which is below our guidance of $12 million.

Looking ahead, we anticipate that 2004 capital expenditures will be in the range of 12 to $13 million; and from a timing perspective, capital expenditures could be modestly higher in the first half compared to the second half, which is a similar to 2003.

And during Q1 2004, we estimate capital expenditures of between $3 million and $3.5 million.

Our total debt remains at $118 million, of which $114 million is our 5% convertible debt which is due March 2006.

And turning to guidance, today we are introducing guidance for the first quarter of 2004 as follows: In reflecting the seasonality of advertising in Q1, we anticipate total revenues of between 60 and $62 million.

This translates into internet revenue of between $52 million and $53.5 million, reflecting an increase over Q1 2003 of between 24% to 27%.

We anticipate publishing revenues between 8 and $8.5 million, which reflects a decline compared to Q1 2003 of between 42 and 45%.

And that's largely due to a 6 to $7 million decline from custom publishing.

Excluding the effect of custom publishing, the remaining publishing activities are expected to increase slightly.

Our Q1 2004 operating income before depreciation and amortization is estimated between break even and $1 million.

And looking at our full year 2004 guidance, our initial full year total revenue guidance of between 265 and $275 million is being increased to total revenues of between 270 and $280 million.

This translates into internet revenue of between $232 million to $240 million, which reflects an increase of between 18 and 22%.

And publishing revenues are between 38 and $40 million, reflecting a decline of 19% to 23%, due to an anticipated 12 to $13 million decline from custom publishing.

Again, excluding the effect of custom publishing, the remaining publishing activities are expected to increase slightly.

Our full year operating income before depreciation and amortization guidance, which was initially set at between 27 and $30 million, is being increased to between 28 and $31 million.

And this reflects a continued focus of generating an incremental profit margin of at least 50% coming from our 2004 revenue growth.

So with that, I would like to turn the call back to Shelby Bonnie.

Thank you.

Let me step back and spend a moment on the overall opportunity.

As a company, we are focused on building great interactive content properties where we can satisfy audiences and also help marketers create demand for their products.

We have done this to date in the personal technology, games and entertainment, and business technology categories.

The opportunity we see in the overall content category continues to grow, and becomes even more interesting over time.

Content properties are uniquely positioned to have the ability to generate demand for products, and at the same time be differentiated through brand and original content to provide margins that are long-term attractive.

At the most generalized level, marketers spend to achieve two purposes: One is creating demand for products; and the second is fulfilling existing demand for products.

If you think about the offline media, creating demand would be like traditional media -- think print, TV, radio adds.

And fulfilling demand would include such things as classifieds and yellow page.

If we then switch to the online media arena, creating demand equates very much -- again, traditional advertising, where marketers spend to create interest or excitement against a category, a brand or particular product.

And the fulfilling demand equates very much to search and pure price comparison, where people know what they are looking for and go in and attempt to find it.

So the last year you certainly see a great deal of growth in the fulfilling demand category, but we believe the bulk of marketing dollars will go to the creation of demand, and that is where we are putting the most of our energies.

This is where, if you look at the offline world, this is where the bulk of offline dollars are spent, and we don't think online will be any different.

We believe that there will be a secular shift in dollars toward the internet, which is going to lead to a five or ten year above average growth rate in this category.

The continuing advances in how people advertise, especially use in such things as rich media and streaming, is only going to accelerate this shift.

Long term, this is where we think the largest and most interesting bucket of dollars will live, and we continue to focus on positioning ourselves as a content company to capture that.

It is not to say that fulfilling demand can't be an important part of our overall revenue mix.

Leads remain in the material part of our business.

As you saw this quarter, we had a nice increase in paid leads, which was across the board, and it adds hope -- we saw the paper download model in Download.com be strong in the second half of the year.

We also continue to be aggressive in monetizing search.

As a destination site as opposed to navigation site, it will never be a particularly high percentage of revenue, but it still remains a very interesting complement to our overall revenue mix.

We've always -- in paid search -- worked with a number of paid search providers, and in the fourth quarter we added Google as our primary provider.

We've also integrated Google's search results into Search.com and believe this remains an underutilized asset of ours.

Producers of content like CNET will focus on using a mix of revenue streams to be able to optimize revenues against its users and user interaction.

Let me switch gears for a second and talk about the individual categories we serve and what we are seeing in those particular businesses.

The largest of the categories we cover is personal technology.

If you ever notice, the majority of our revenues in this area is concentrated in traditional personal tech categories like desktops and notebooks, categories where there is modest growth forecast.

As we have said before, the growth in this category -- overall personal tech -- will really come out of the consumer electronics category, where there is a great deal of both consumer and retail excitement.

The Consumer Electronics show in Las Vegas, which occurred in January, had great energy and great products, and we continue to position ourselves solidly against this opportunity.

We've also, in the consumer electronics area, had some nice wins recently.

A nice example of this win is CNET.com with Digital Living.

Digital Living is an immersive environment that showcases consumer electronics products as part the home and helps users figure out how these products should be integrated together.

It represents the nexus of good editorial and strong product coverage.

We rolled out the second version of Digital Living recently, right before the Consumer Electronics show, and fortunately, there was a lot of advertiser interest, and it ended up that our initial advertiser [INAUDIBLE] for the new program.

Download.com has grown in importance from a revenue standpoint.

It has always been strong from a user standpoint, one of our most known and used properties.

We cover files from over 15,000 different publishers.

Our paper download program, as I said earlier, was off to a strong start in the second half of 2003.

We also recently rolled out a more in-depth games category.

There was category where we partnered with Gamespot, and have announced a music category where we will be rolling out a catalog of free music, provided primarily by independent artists.

Our second category is games and entertainment.

It is still a small category, it's seen very nice growth in the past year as it continues to become more and more material.

We've had great success against game publishers in 2003; and 2004, we will put an even greater sales effort behind the traditional consumer advertisers.

Those efforts are focused squarely on males 18 to 34, where Gamespot is extremely strong.

We also announced during the fourth quarter that we purchased mp3.com.

We will be launching a comprehensive music information site that will be largely focused on teens and young adults under the mp3.com domain name.

Our third major category is business technology.

And finally, after what's been a troubling last two years from an overall health of market standpoint, we are beginning to see growth as this market gets healthier.

We think we will see some growth here, albeit growing from a smaller base than we would have seen two years ago.

Our sites in this area only continue to get more useful, and News.com continues to stand out as one of the rare examples of the highest levels of editorial excellence, both online and off.

That is reflected in having won over 30 awards this year alone.

As you can see in our segment reporting, our international operations saw growth of 23% in the fourth quarter versus the fourth quarter of last year.

The two best performing businesses internationally were our two largest markets, China and the U.K..

And this segment was profitable for us in the fourth quarter.

Finally, switching gears to outlook.

From an outlook standpoint, the most important thing we are focused on in this organization is growth.

The more growth we deliver, the more interesting our business becoming.

Based on the operating leverage in our business, by increasing revenue growth rates, we can achieve a higher level of growth in both profits and cash flow; and to fuel that growth, we have to be opportunistically reinvesting in our business.

Mp 3.com is a good example of how we can use our existing business as a foundation for growth.

With our content expertise and built on our existing platform, we believe we request can resuscitate a vanguard brand and create a business that is very compelling.

As the market continues to strengthen and grow over the next year, new product launches like this become much more interesting and can be a very good return on invested capital.

So in conclusion, fourth quarter was very encouraging.

We saw increasing acceleration in our quarter net revenues through the year.

We were able to translate that into profit wins at the bottom line; and finally, we are seeing opportunity ahead for our category and for our company.

That wraps up our formal comments, and we'd like to turn it over to the operator so we can open it up for questions.

At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad.

Your first question comes from the line of Lanny Baker with Smith Barney.

Thanks a lot.

I had two questions.

Number one, I was wondering if you could talk about your relationship with Google that you started in the fourth quarter.

Was that a meaningful contributor to the revenue upside that you saw in the quarter and the profit upside in the quarter?

And secondly, I guess if we're pushing the numbers around correctly the publishing business has a very small single digit profit margin.

We kind of back into some profitability numbers on the internet side in terms of the marginal profitability for next year that are a little bit below the 50% threshold.

I think that's kind of what we are seeing.

I guess a long way of asking, how much expense growth on the pure internet side do you anticipate?

Sort of what's the investment level in percentage terms on the internet side that you are looking at for '04 to drive the growth that you are looking at in the top line?

Okay, I will start with question one and then let Doug pick up on question two.

We have been in the paid search business back since -- way back to the old go-to days.

So we were an early participant in paid search through Search.com and other parts of our service.

So that's been an ongoing piece of our business.

And as I said in my comments, as a destination site, it's always going to be a lower percentage than you might see from a navigation site.

Having said that, you know, it could become a more and more important part of our business, and we'd like to see that percent as high as possible.

And we rolled out the Google relationship at the beginning of the fourth quarter, and we have been very happy with what we have seen from that contribution side.

But if you look at overall results of our business, we saw across the board, whether it was in the branding side or other piece of our business, we saw growth on all different factors.

Everything was a contributor in what we believe was good fourth quarter.

Yeah, and as -- getting to the profitability level and the investment levels to sustain our growth in 2004, I think the math, if you will, if you take a look at our revenue guidance, which is 270 to 280, and if you just want it look at the midpoint kind of to do the math, that's up about $30 million from where we ended 2003 on a full year basis.

So if we are able to capture half of that at least on a go-forward basis, that helps generate, you know, under simple math, about $15 million of profit.

So if you look at kind of where we were in 2003, we generated operating income before depreciation and amortization of $2.8 million.

Albeit, we also had some severance costs in the first half of 2003 of about.$9.7 million.

So combined, it kind of -- thinking about the severance as being not a recurring item, we earned a $12.5 million level.

So I think if you combine our profit growth with our actual results this year, it gets you to where we are in our guidance that we provided today, in the 28 to $31 million range.

And as far as investment levels, you know, I think we -- and this is in concert, which most of this will come as you observed from the fuel that the internet growth is providing for us right now -- so most of the profitability growth would come from the internet operation.

And, you know, our overall investment against our existing assets and resources, content areas such as mp3.com, which is in the early days, you know, gets us into an investment level, in kind of -- you know, on a percentage basis, kind of in the mid-single digit compared to our overall revenue growth.

And that should position us fairly well to continue to increase our profits, and as Shelby talked through, we'll continue focus on making sure we can sustain our growth by making investments and improving our margins hand in hand as we go forward.

Yeah, I think that -- just giving a little context to it -- I think one of the most critical thing we will focus on this year is growth, and that's where the business gets interesting.

And as we demonstrated in the fourth quarter with the 78% incremental margin an ability to cash a check, that this business works, that we can drive significant amounts of profit from it.

And we were taking a 5 to 10 year view.

We think there is a huge opportunity in overall content space.

We're going to invest against it.

We think things like mp3.com are good investments and we can get very good returns and very good leverage off of our platforms.

And we have to walk that fine line based on how much you want to reinvest to fuel future growth.

I think we all recognize the higher we can take the growth rate, the more interesting that profit and cash flow generation gets in outer years.

And so that -- you know, those are the balances we make, based on what we see opportunity as inherent in our business.

Thanks.

Your next question comes from the line of Gordon Hodge with Thomas Partners.

Good afternoon.

A couple questions.

One, you cut a couple of deals, one with AOL and one with MSN.

And I'm just curious, were they partially responsible for the increase in traffic?

My understanding is you are getting paid by them for your content.

Can you just answer that -- and then I've got another question on Gamespot.

Yeah, those are really content licensing deals.

So those are not traffic deals.

I think, you know, clearly they give us some additional branding and awareness as people learn about our products.

But those weren't done as kind of traffic aggregation deals on the AOL side.

I think what we have seen, in terms of just overall traffic growth, we have seen really nice organic growth against each of our three different categories.

And I think the products are delivering value to users, and I think that is what you are seeing reflected in those numbers.

Great.

And then, I guess on Gamespot, if I did the math right here, it sound like you are up -- ad revenues may have been up 145% in the quarter with a 75% increase in campaigns and a 40% increase in each campaign.

That's got to be getting to be a meaningful number, I would think.

You mentioned that it's still small.

But if you give us just a --

Yeah, I just said I'll -- as you know, we don't break those numbers out.

But what I would say is we are seeing very high growth overall and we have -- in the games entertainment area.

And I think with the addition of mp3.com and others, we have high hopes for this.

And as I mentioned in my comments, we -- the money we have been making off of Gamespot has largely been from game publishers.

And we think that this is a logical demo, males 18 to 34, where we can get some significant consumer products advertising.

So we are investing in that this year.

And we think, you know, that is going to continue to contribute in this category overall and can be a pretty interesting category for us.

Terrific.

Thanks a lot.

Your next question comes from the line of Safa Rashtchy of Piper Jaffray.

Good afternoon.

Couple of questions.

One, if you could give us an update on the sale cycle.

You've always had kind of a more comprehensive product offering that sometimes took long for advertisers to get on board.

Given the increased demand, can you tell us how it's coming -- if you are having success in convincing advertisers in a short period of time to kind of take the whole package of trial and then presentations, and [INAUDIBLE] and all that.

And then I have a quick follow-up.

Yeah, I would say overall -- really beginning in the second half of the year, we saw the market begin to solidify, and we have seen marketers taking a longer view with respect to how they are thinking about advertising.

We've especially seen that in the enterprise category, which, you know, for a lot of years was a category from an overall kind of health of market standpoint that had been challenged.

And we've talked a lot about it on these conference calls, and I think we've started to see that get healthier.

And a lot of that was really good product and sales work on behalf of our teams, who really have done a really good job of building strong relationships and being able to make the types of products we offer a significant and meaningful part of people's business.

Okay, and my second question is about the way that you could maybe look at the entire company, internet and non- internet components.

In the past you've had some synergies among them, but given the the much faster growth in internet component, do you still feel that there is enough synergy to continue to have the non-internet components?

Yeah.

We have -- you know, we are blessed in this among the print properties we have.

We have some very strategic and attractive properties.

And you would especially say that those properties when you look outside of the U.S. can be very beneficial to us in terms of how we are able to work in concert between internet and print together.

And, you know, the print operations remain profitable for us.

And I think they have been a really good way for us to expand our business.

I think we do recognize, though, if you look at kind of growth trajectories, that over time, internet will continue to become a more and more and more important part of our business, and you will see print become a smaller part of our business.

Great, thanks.

At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad.

Your next question comes from the line of -- your next question comes from the line of Anthony Noto from Goldman Sachs.

Thank you very much.

Doug and Shelby, I was wondering if you guys could talk about as you go forward the incremental EBITDA or incremental operating margins -- very strong in this quarter, obviously, but now that you're seeing a recovery in the top line, how do you think about where that can level off and how do you tradeoff reinvesting in content and functional versus profitability, and what should we really be thinking about it on an incremental margin basis?

Thanks.

Well, I think as Doug mentioned in his comments, we've been very much focused on a greater than 50% incremental margin going forward.

And I think it's a -- you know, a lot's going to be determined on what we see in terms of opportunities for us to reinvest dollars.

You're also see -- and I think you see this in first quarter numbers -- you will have some seasonal functions in our business which are going to make -- if you look at the incremental margin on a pure quarterly basis, they're going to sometimes make those fluctuate in our year.

And so, you know, I think the most important, I think [INAUDIBLE] for us is, we were seeing from a long term perspective significant opportunities to grow the categories we have, and we think there's big buckets of dollars for us.

But if you just do the math, as revenue growth rate grows and you drop 50%, at minimum, to the bottom line, that you're going to see expanding margins.

And this business will continue to get more interest.

And I think that -- those are the things we're going to evaluate as we run this business.

So -- and you may have already said this, I was bouncing back and forth between two calls -- what was the trend in pricing this year versus a year ago, and maybe sequentially, and where were the pockets of strength if pricing was up, in [INAUDIBLE], sort of tactic and category.

I would say overall, just to make a comment, I would probably say pricing was relatively flat.

You know, you still have an environment among most people in the interactive space where they have more -- there is more inventory than there is demand for the inventory.

And so I think what we have done that actually has been very notable is, we have been able to maintain price over the last couple of years, but being very smart about packaging and thoughtful about how we take different components of inventory, and in places have been able to take up prices, and some places been able to take down prices.

So that has been a real benefit in kind of the uniqueness of us as a content destination, in that those inventory and those environments have been very attractive for marketers.

Thank you.

Your next question comes from the line of David Marsh with Friedman Billings.

Thank you.

Great quarter, guys.

Was really well beyond expectations.

Just a couple of questions.

One is, with regard to cash flow, obviously this quarter was impacted primarily from changes in networking capital issue, where receivables increased significantly.

So the question is, would you expect to have pretty nice positive free cash flow in the first quarter and exit the first quarter with a better liquidity balance?

And the second question is, with regard to your growth initiatives, do you plan on any more acquisitions to help spur your growth?

And if so, could you give us some idea of what possible areas that those acquisitions are focusing on?

Yeah, on your question of working capital and what we experience in Q4 is typical with the seasonality where we do lots of revenue.

And those billings, particularly in November, December, are collected in Q1.

So although our accounts receivable balance went up on a dollar basis, that was anticipated.

Equally so, our accounts receivable balance should decline in Q1 of '04.

Which is, if you look back at the movement from Q4 '02 to Q1 '03, you'll see the same results.

And I would say to the second question, we are an entrepreneurial organization.

And that has been -- you know, you look over time, we've had a history of launching new services, making small acquisitions where we think we can add value and make them be accretive to the overall business.

And as we look at opportunity, there is a big opportunity over time to continue to take dollars as they migrate to the internet, especially in the content category.

And what I think is interesting about the example of mp3.com is, we were able to take what's a vanguard brand, leverage the existing [INAUDIBLE] from all the work that we have done the last three years to resuscitate that brand and create a service that we think can be very compelling.

And as you guessed, the rate of return you get on something like that, based on the fact that we get so much leverage out of what we've already built, I think we create a very compelling business opportunity, and we're going to be opportunistic if we see opportunities, if we see what we have built on.

Thanks.

Great quarter, guys.

Again, I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone key pad.

Your next question comes from the line of Lanny Baker with Smith Barney.

Thanks a lot.

I was wondering -- just one other question and that is, as you look at the 6% to 10% to 16% growth rate of your internet business -- and I haven't yet run the numbers on what the marketing services growth rates were sequentially -- do you feel like CNET is maintaining share of your -- of the advertising dollars that are sort of reasonably available, given your content area?

Or are you gaining share, and what would are your expectations for your share of your sort of addressable customers, reasonable customers, margin dollars in the coming year.

Well this is -- I mean, it's going to be a gut response, because as you know, there aren't great numbers on this.

But our sense as we look at the market is that in the categories we compete where we made the distinction between kind of creating a demand and fulfilling demand, we think in the creating demand are that we showing a real ability to take share over time.

It's been a slower market to come back, and we've clearly seen a lot of growth that has come from fulfilling demand, kind of search, and what I would say is pure price comparison, over the last two years.

I think what we have shown is an ability to create demand, which I think over time is the larger bucket of dollars.

Then we have been able to take share and build strong relationships, [INAUDIBLE] relationships that can last for years and years and years; and we can just continue to build on top of those and continue the growth that we saw in 2003.

Ladies and gentlemen, we have reached the end of the allotted time for questions and answers.

Ms. Finnegan, will there be any closing remarks?

No.

I would just -- Doug and I would like to thank everyone for their participation.

We look forward to talking to you next year -- or next quarter. [LAUGHTER]

This concludes today's CNET conference call.

You may now disconnect.