Around the Net

News Corp.'s Stock Wanes On Weak FIM Growth

Thanks in part to harried investment in MySpace, Rupert Murdoch has turned News Corp. into a "toxic stock." A pair of analysts, Sanford C. Bernstein & Co. Analyst Michael Nathanson and UBS AG's Michael Morris, recently lowered their price targets for the New York-based company after News Corp. said Fox Interactive Media, its Internet division, would miss its 2008 goal of $1 billion in revenue. Nathanson dropped his price target by 13% to $21, while Morris lowered his $1 to $25. News Corp. is currently trading at between $18 and $19 per share.

The media giant is pouring investment into MySpace, expanding into new countries like South Korea and India, while adding a revamped music service at considerable expense, and a new advertising targeting system that has yet to pay off. As a result, Bloomberg says that Fox Interactive's costs will be almost as much as revenue, jumping 46% this year, and risking long-term profit growth.

''When you have such a powerful asset as MySpace and you can't successfully monetize it, that's a problem for investors,'' said Daniel Poole, assistant research director at wealth management fund National City Corp. ''It's hard to argue for multiple expansion when you have that many visitors and you're not making the amount of money you thought.'' MySpace has 107.7 million users, almost the same figure as in March 2007, while competitor Facebook has tripled to 100.3 million users, according to comScore.

Read the whole story at Bloomberg News »

Next story loading loading..