24/7 Media (Nasdaq: TFSM) said Wednesday it will see a gain of about $11 million from its sale of 150,000 shares of China.com (Nasdaq: CHINA), and see a cash profit in its first quarter.
The sale will bring in $13 million total, said 24/7.
China.com shares have soared since the company's IPO, blasting ahead on a recent stock split. Shares of 24/7 Media, which provides online advertising and direct marketing networks, closed at 61 5/8 Tuesday, having risen on recent coverage initiation. On Tuesday, Credit Suisse First Boston started the company at a "buy" rating and set a $90 price target on the stock.
The company is trading at a 70 percent discount to its closest competitor DoubleClick Inc. (Nasdaq: DCLK) wrote analyst Rich Petersen of CS First Boston. Though some of that is justified, because 24/7 Media doesn't yet have a proprietary advertising management technology, 24/7 is rolling its own program out during the first quarter, Peterson said.
Proceeds of the underwritten public offering are around $13 million shares. 24/7 said that, including the sale, it now expects to report a cash profit in its first quarter, to be reported in May. First Call's consensus estimate for the first quarter is for a loss of 74 cents a share.
24/7 continues to hold about 3 million shares, or 7.3 percent in the company. Other major holders of China.com stock following its IPO include Asia Pacific Online, with 14.8 percent, Xinhua News Agency, with 10.9 percent, and America Online (NYSE: AOL) with 8 percent.
24/7 said it has high expectations for its other investments, which includes 800,000 shares in ShopNow.com. The aggregate value of 24/7 Media's interests in the common stock of Chinadotcom and ShopNow.com (Nasdaq: SPNW) is about $330 million based on closing prices on January 24, 2000, representing a holding gain of approximately $285 million.
24/7 beat estimates in its third quarter. First Call is predicting the company will report a loss of 71 cents a share in its fourth quarter.