Here’s an interesting SEC analysis of Salon.Com. Some highlights:
Salon has incurred significant net losses and negative cash flows from operations since its inception. As of March 31, 2002, Salon had an accumulated deficit of $76.6 million. These losses have been funded primarily through the issuance of preferred stock and Salon’s initial public offering of common stock in June 1999.
Salon believes that it will incur negative cash flows from operations for the year ending March 31, 2003. Although Salon has targeted positive cash flows from operations for the fourth quarter of fiscal year 2003, because of the rapid and unexpected sharp deterioration of the general business climate in the past year and a half, Salon may not achieve either positive cash flows from operations or financial reporting profitability in the future.
It’s difficult to see how Salon.Com is ever going to make a profit. It cut back its expenses to what it says are a bare minimum, but it is spending in excess of $10 million annually.
Meanwhile, its revenues took a drastic turn south. Total revenues declined by half last year to a paultry $3.6 million.
The SEC analysis says that Salon.Com acknowledges it will against lose money in fiscal year 2003, but apparently the company believes it will enjoy a profit in the fourth quarter of 2003. Yeah, and it might still run a sex column worth reading, but I wouldn’t bet on either of those scenarios coming to pass.
What really astounds me is that Salon.Com spends so much money and yet actually generates rather paltry visitor numbers. According to the SEC,
Salon has averaged approximately 3.5-3.8 million unique visitors per month. A unique user is an individual visitor to Salon’s network.
That’s more than $2.60 per “unique visitor”. That is way too high for what Salon.Com is selling (i.e., advertising and premium memberships).