Community Update on Vertro

March 21, 2011 at 3:30 pm Leave a comment

Quick update for Groove participants on Vertro. We still believe in the potential of Vertro despite the market’s abandonment of the shares. Due to the issues we highlighted following the company’s Q4 preannouncement, we still expect Q1 to be challenging as the company replenishes its key revenue driving Region One user base. As has typically been the case in the past (except 2010) , we expect Q1 revenue to come in below Q4 revenue due to seasonal factors including the annual slowdown in internet usage around the holidays that constrains Vertro’s ability to acquire new users and the lack of the bump in non search revenue that accompanies the holiday shopping season. The stock has already fallen 50% from the highs achieved in November, so the shares will prove to be cheap if the company is able to get back on track in Q2. While we believe that the company will be able to achieve sequential growth again in Q2, any advances in the stock might be constrained in the absence of insider and/or company stock buys or some other catalyst. Other potential catalysts include takeover speculation or accretive acquisitions by the company.

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