Looks like decent domain sales but fading traffic revenue partially related to the economy is the main problem. Perhaps domainers hubris about not being affected by the economy may eventually have to be moderated some. Also, stock value doesn't always really give a full picture of a companies condition. Some prices are inflated while others are trading below actual value. This is a mind game in part, of course.
From:
June Quarter Trading Performance
The company had a mixed trading performance in the June quarter reflecting a good
domain sales performance but ongoing difficult trading conditions on the traffic /
advertising side of the business.
Domain sales in the June quarter were approximately US$2.8 million, significantly
better than both the March quarter (US$1 million) and the corresponding quarter in
2007 (US$640,000). This was due to three factors.
Firstly, secondary market sales of domains to retail buyers, primarily through the
Domain Distribution Network (DDN) have continued to show growth as the various
DDN partners (including GoDaddy) improve their respective sales processes.
Secondly, the company sold a premium domain name for US$250,000 during the
quarter.
Finally, the company sold some domain names to other professional domain name
investors. This last factor highlights an important point about Dark Blue Sea - the
directors see the bulk of Dark Blue Sea's shareholder value residing in the
company's domain name portfolio. The domain name portfolio gives the company
considerable flexibility in managing the business, reported profits and liquidity.
Further discussion about the domain name portfolio is contained below.
Dark Blue Sea is a US centric business that generates most of its revenue from
direct navigation advertising which is part of the US online advertising industry. The
key factors that are currently driving the direct navigation advertising industry are
7 the weaker economic environment in the US
7 generally fewer advertisers (as observed by Dark Blue Sea) leading to a
reduction in bid prices and coverage and hence overall yield received by
Dark Blue Sea
7 changes to the way that online advertisers can place advertisements via the
advertiser interfaces of the major search advertising networks; and
7 an overall uncertain strategic landscape stemming from the unsuccessful
takeover bid for Yahoo by Microsoft and the subsequent outsourcing of
search advertising to Google by Yahoo.
Detail commentary on each of these factors was provided in the March 2008 Quarter
KPI report lodged with the ASX on May 6, 2008. Since the release of this report
three months ago, trading conditions have continued to deteriorate and the outlook
remains uncertain.
