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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 22, 1999 (April 21, 1999)
CNET, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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Delaware 0-20939 13-3696170
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(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF INCORPORATION) IDENTIFICATION NO.)
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150 Chestnut Street
San Francisco, California 94111
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(415) 395-7800
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ITEM 5. OTHER EVENTS.
On April 21, 1999, CNET, Inc. (the "Company") issued a press release
announcing the Company's earnings for the first quarter of 1999 and announcing
a 2-for-1 stock split in the form of a stock dividend payable May 28, 1999 to
record holders of the Company's common stock on May 10, 1999, pending approval
by stockholders at the May 26, 1999 annual meeting of a proposal to increase
the number of common shares authorized for issuance. The press release is
attached hereto as Exhibit 99.1 and is incorporated in its entirety herein by
reference. See "Index to Exhibits."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press Release issued by CNET, Inc. on April 21, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 22, 1999 CNET, INC.
By: DOUGLAS N. WOODRUM
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Douglas N. Woodrum
Chief Financial Officer
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INDEX TO EXHIBITS
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Exhibit
Number Description
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99.1 Press Release issued by CNET, Inc. on April 21, 1999.
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EXHIBIT 99.1
SAN FRANCISCO, April 21 /PRNewswire/ -- CNET, Inc. (Nasdaq: CNET) today
reported revenues of $19.6 million for the first quarter ended March 31, 1999,
a 101 percent increase over revenues of $9.8 million for first quarter ended
March 31, 1998. Proforma net income for the first quarter was $3.4 million or
$0.09 per diluted share, excluding goodwill amortization related to the
acquisition of WinFiles.com and gains on the sale of equity investments. For
the comparable period in 1998, CNET reported a net loss of $5.7 million or
$0.19 per diluted share.
Including goodwill amortization and gains from the sale of equity investments,
net income equaled $23.0 million, or $0.61 per diluted share.
In addition, CNET today announced a 2-for-1 stock split in the form of a stock
dividend payable May 28, 1999 to record holders of common stock on May 10,
1999, pending approval by stockholders at the May 26, 1999 annual meeting of a
proposal to increase the number of common shares authorized for issuance.
Halsey Minor, CNET Chairman and CEO, stated, "CNET's strong financial
performance in the first quarter solidified CNET's position as the Internet's
leading content network. In the quarter, we focused on making our services even
more useful through strategic acquisitions and key enhancements to our
network."
CNET Online
Revenues for CNET Online were $18.0 million for the quarter, a 124 percent
increase over revenues of $8.0 million in the first quarter of 1998. Traffic on
CNET Online sites increased 16 percent to 9.5 million average daily page views
in the first quarter, compared to 8.2 million average daily page views in the
fourth quarter of 1998.
In March, CNET re-launched its hub, CNET.com, with a new, simple and intuitive
design that allows users to navigate more easily through CNET's vast network of
technology-related information and services. The move was the first in a series
of enhancements to the network that will create the Internet's single most
useful and complete resource on computing and technology.
In the quarter, CNET completed a number of acquisitions that will expand the
ways in which buyers and sellers can interact at CNET:
* ShopBuilder is an online store creation system. ShopBuilder will enable
users to compare products and prices from small and midsize computer
manufacturers and resellers, including resellers of unbranded computer
systems, known as "white box" PCs. Sales of "white boxes" account for an
estimated 30 percent of the $75 billion U.S. PC market. CNET expects to
launch its store-building service in the second quarter of 1999.
* AuctionGate.com is a leading auction site specializing in computer
products. The acquisition enables CNET users to participate in
person-to-person and business-to-business auctions of used, refurbished,
surplus and end-of-line computer products. Jupiter Communications reports
that 24 percent of online consumers are likely to purchase PC hardware,
and 21 percent PC software, via online auctions within the next 12 months.
(A) CNET expects to launch its auction service in the second quarter of
1999.
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* WinFiles.com is a leading software downloading service on the Internet.
The purchase consolidates CNET's position as the largest source of
free-to-download software on the Internet, and strengthens CNET's role in
linking software buyers and sellers.
* KillerApp is an award-winning network of comparison shopping services
for computer and consumer electronics products. The acquisition
consolidates CNET's position as the Internet's leading resource for
computer products and prices, and accelerates its entry into the consumer
electronics category.
Minor continued, "These acquisitions have helped to expand CNET's position as
the premier venue bringing buyers and sellers of computer products together. As
these services roll out in the second quarter, CNET will become the Internet's
first and only resource that allows users to compare computer products and
prices across all channels, from retail to local to auctions."
CNET's shopping services generated an average of 104,000 leads per day in the
month of March, compared to an average of 90,000 leads per day in the month of
December. CNET recently announced that Egghead.com, NECX Direct and
HardwareStreet.com, Inc., have all renewed their premier status in CNET's 1999
Merchant Program, which now has 83 participants, up from 70 in the fourth
quarter of 1998. Two new premier merchants, ClubComputer.com and Virtual
Technology Corporation, upgraded their status from preferred. New preferred
merchants for the 1999 program include Onsale, Inc., Beyond.com,
Computers4SURE.com, CDW, PC Mall, and Buy.com. The overall renewal rate for the
1999 Merchant Program was 93 percent.
Yesterday, CNET announced that it has entered into strategic relationships with
Dell, Compaq, Gateway and Acer to participate in CNET's new Premier PC
Manufacturers Program. Modeled after CNET's successful Premier Merchant
Program, the program is designed to provide PC manufacturers premium ad
placements at strategic positions within the CNET network that increase brand
awareness and generate qualified sales leads. The new ad program launched on
the network yesterday.
Finally, in the quarter, CNET signed a major distribution agreement with
America Online intended to bring CNET's world-class shopping services to a
whole new audience of users. CNET began a phased roll-out of the CNET/AOL
co-branded hardware and software buying guides this month on the AOL service,
AOL.com, CompuServe, AOL's Digital City and certain AOL International services,
and will continue to add new features throughout the second quarter.
CNET Television
CNET Television remained profitable in the first quarter of 1999, with revenues
of $1.7 million, compared to $1.8 million in the first quarter of 1998.
CNET Investments
CNET's technology-related investments continued to create value for its
stockholders and strengthen its financial position. In March 1999,
BuyDirect.com, in which CNET held a 16 percent stake, was acquired by
Beyond.com (Nasdaq: BYND) to create the world's leading online software
reseller. CNET now holds approximately 750,000 shares of Beyond.com. In
addition, Vignette Corporation, (Nasdaq: VIGN), a manufacturer of premier Web
publishing software in which CNET holds 2.3 million shares, completed an
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initial public offering in February 1999. In the quarter, CNET raised $173
million through a Rule 144A offering of 5 percent Convertible Subordinated
Notes. CNET continues to own effectively 40 percent of Snap.com, a search and
navigation service co-owned by NBC. Excluding Snap.com, CNET's combined cash
and marketable securities give the company non-operating assets of more than
$400 million in value.
About CNET
CNET, Inc. is at the leading edge of media companies, producing a branded
Internet network and television programming for both targeted and general
audiences. Online and on television, CNET is the leading authority on
computers, the Internet and digital technologies. CNET's network serves
millions of users each day. CNET television programming airs on USA Network,
the Sci-Fi Channel and in national syndication, as well in 40 foreign
countries. CNET effectively owns 40 percent of Snap.com, a search and
navigation service for all Internet users, co-owned by NBC. CNET also owns 2.3
million shares of Vignette Corporation, a manufacturer of premier Web
publishing software, and approximately 750,000 shares of Beyond.com, the
world's leading online software reseller.
This press release contains forward looking statements that are subject to
significant risks and uncertainties. Although the Company believes that the
expectations reflected in its forward looking statements are reasonable, it can
give no assurance that such expectations or any of its forward looking
statements will prove to be correct. Important cautionary statements and risk
factors that could cause actual results to differ materially from those
reflected in the Company's forward looking statements are disclosed under the
caption "Additional Factors that May Affect Future Results" in the Company's
latest quarterly report on Form 10-Q and under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Outlook and Uncertainties" in the Company's latest annual report on Form 10-K,
copies of which may be obtained from the Company.
(A) Jupiter Communications/NFO Interactive Online Consumer Survey, March 1999
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CNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(000's Omitted)
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Three Months Ended
March 31,
1999 1998
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Revenues:
CNET Online $ 17,950 $ 8,009
Television 1,652 1,752
Total revenues 19,602 9,761
Cost of revenues:
CNET Online 6,838 5,289
Television 1,607 1,747
Total cost of revenues 8,445 7,036
Gross profit 11,157 2,725
Operating expenses:
Sales & marketing 4,920 2,480
Development 1,508 777
Corporate 1,527 1,644
Total operating expenses before goodwill 7,955 4,901
Total operating profit (loss)
before goodwill 3,202 (2,176)
Goodwill amortization 306 --
Total operating profit (loss) 2,896 (2,176)
Other income (expense)
Equity losses -- (3,679)
Gain on investment sales 19,875 --
Interest income, net 237 199
Total other income (expense) 20,112 (3,480)
Net income (loss) $ 23,008 (5,656)
Proforma diluted net income (loss) per
share before goodwill and gain on
investment sales $ 0.09 $ (0.19)
Basic net income (loss) per share $ 0.67 $ (0.19)
Diluted net income (loss) per share $ 0.61 $ (0.19)
Shares used in calculating basic
per share data 34,495 29,570
Shares used in calculating diluted
per share data 37,977 29,570
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CNET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's Omitted)
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March 31, December 31,
1999 1998
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ASSETS
Current assets:
Cash and cash equivalents $214,068 $52,479
Marketable securities 194,125 --
Accounts receivable, net 16,667 16,785
Other current assets 9,914 1,705
Total Current assets 434,774 70,969
Property and equipment net 15,337 15,325
Other assets 22,087 2,060
472,198 88,354
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 3,464 3,477
Accrued liabilities 8,946 6,593
Current portion of long-term debt 1,063 1,112
Total current liabilities 13,473 11,182
Long-term debt 179,118 569
Total liabilities 192,591 11,751
Stockholders' equity:
Common stock 4 3
Additional paid in capital 130,719 127,770
Unrecognized gain on investments 177,308 --
Accumulated deficit (28,424) (51,170)
Total stockholders' equity 279,607 76,603
$472,198 88,354
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