August 21, 2008 | The Biz

PlanetOut in precarious position

Things have gone from bad to worse for embattled gay media company PlanetOut, the corporate parent of online personals and news site  gay.com. On August 11, following news of a $100 million accumulated deficit (including a 2007 loss of  over $50 million), the company announced that its stock on the NASDAQ exchange  faces possible delisting.

PlanetOut has been selling off some of its  properties over the past year. Last December it off-loaded its money-losing RSVP Vacations unit to Atlantis Events Inc.  This April it sold its magazine and book publishing business, including "Out," "The Advocate," "Men," "Freshmen" and "Unzipped," to GLBT cable channel here! for a mere $6 million. (It paid over $30 million for the magazines in 2005.)

According to PlanetOut chief executive officer Karen Magee. "...  we believe that the divestiture of our publishing businesses will enable PlanetOut Inc. to devote all of our attention and resources to our core online businesses, Gay.com and PlanetOut.com."

Which is what they should have been doing all along as nimble competitors have multiplied, eating away at gay.com's market share in online personals.

Magee added. "This will ensure that all of our powerful brands have a better chance to grow and prosper, and will ultimately produce greater value for our shareholders."

But is it too little too late?  [more]

Last month PlantOut reported a deficit of nearly $100 million. Not good news for the publicly traded company. Yesterday shares closed at $2.70, a fraction of the 52-week high of $9.40. The total value of the traded shares is so low that the company has been given until October 30 to meet a required market value of $5 million or be delisted from NASDAQ.

“PlanetOut intends to monitor the minimum market value of publicly held shares of its common stock between now and October 30. If its common stock does not trade at a level that is likely to regain compliance, PlanetOut's board of directors will consider options available...”  the company said.

In January, PlanetOut hired a consulting firm to advise it on corporate strategy, including the possible sale of the company. Barring a miraculous turn-around, such an outcome appears more and more likely.