3
HandHeld Entertainment (ZVUE) buys eBaumsWorld, investors yawn
Topics: UncategorizedNow investors know better. When ZVUE announced today that it was acquiring eBaumsWorld.com, the stock barely budged and ended up closing down $0.04 to $1.78 on just slightly-above-average volume. ZVUE will pay $17.5 million, including $15.0 million in cash and $5.0 million in common stock. In addition, HandHeld may pay earn-outs of up to $32.5 million
ZVUE management describes eBaumsWorld as “one of the oldest and most successful user-generated content (UGC) sites in the world, generating approximately $5.2 million in revenue and $1.6 million in net income before income taxes in 2006.” CEO Jeff Oscodar said “Acquiring eBaum’s World demonstrates tremendous progress toward our stated goals of becoming a global leader in digital entertainment, as well as increasing our revenues and helping us become cash flow positive. . . Both the initial and earn-out consideration for this acquisition are based on a 6X pro forma EBITDA multiple, which we believe is a strong value relative to current market multiples for comparable companies and is consistent with our commitment to create shareholder value.”
I think this is a great deal — for Eric Bauman. His eponymous site might have generated some income last year, but according to Alexa, it has been in a steady slump since mid-2005. Don’t expect a change under ZVUE’s control. HandHeld management has yet to prove that it can leverage portfolio sites to squeeze out more profits or even more revenues. And then there are the accusations of plagiarism and copyright theft. eBaumsWorld is not a trophy property. ZVUE investors appear to recognize that.
DISCLOSURE: No position.
[...] this is definitely a very nice payday for Bauman, many are quick to point out that eBaumsWorld has been in a slide over the past few years. Other sites in related fields have generated a much larger payday for their creators including [...]
I think HandHeld Entertainment is going to be a valuable stock in the near future. Now is the time to buy it while the price is low. After the eBaum acquisition, HandHeld is now one of the top online media distributors in the world. And online streaming media is the entertainment medium of the future.
Josh, I agree that HH’s best opportunity is in media distribution, not hardware. If they can generate positive cash flow from that side of the business, and shut down the hardware sinkhole, you may be right. You also correctly note that the current market price places a low probability on the company succeeding with those efforts, and should offer upside if the company actually delivers.
Dont forget Carl Page is the brother of the founder of Google that is probally the most important connection out of all of this
I didn’t forget — I just think that retail investors’ myopic focus on that relationship is misguided. Carl Page did successfully sell another internet company, and probably has connections from that — but he sold it to Yahoo!, not Google.
fraude Stratumseind Eindhoven…
but that lower e is their money maker. that’ s like taking away coca- cola’ s red. you just don’ t do that with a working brand. overall i prefer their old logo simply for that reason….