9th August 2012  Geeknet 2cd Quarter Profits on Shirts and Software.

Geeknet Inc. (GKNT), the online network for clothing, feeding, educating and informing the geek community, released its second quarter results for the period ending June 30th 2012 last Friday.


ThinkGeek, the first port of call of any nerd in the need of a cure for nudity, a lack of caffeine or bacon based food/hygiene products or for those in need of a Minecraft Pickaxe, saw e-commerce revenues increase $3.5 million from the same quarter last year and up almost $300,000 on the last quarter to $17.8 million. Media revenue, generated through Sourceforge, Slashdot and Freecode was $5.2 million, down slightly on the same period last year and up $500,000 on last quarter. Geeknet reported net income of $1.6 million which includes the sale of a preferred interest and when this is accounted for the company generated a loss of $2.4 million.


While e-commerce makes up over 77% of total sales, a high cost of revenue means it makes up only 34% of the gross margin figure of $6.1 million, total sales minus cost of sales. E-commerce cost of revenue was $15.7 million while media costs were only $1.1 million.


Geeknet has performed very well in the final quarter of each year for the last two years on the back of large e-commerce revenues due primarily to the festive season. In 2011 the quarter ending December 31st was the only one in which the company generated a profit but the year still ended negative by $1.1 million.


In May Geeknet announced it would be undertaking a "review of strategic alternatives for online media business". This included the possibility of selling part or all of its media business or investing additional capital to expand it. Recently ThinkGeek has announced the IdeaFactory, a program whereby they will accept ideas for new products and reward the inventor.


After the release of the results The Benchmark Company increased their target price for Geeknet shares from $20 to $22 and maintained its buy rating. Shares fell from $19.78 to $19.01 on the results release and closed on Thursday 9th at $18.72 per share.



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