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Online content company Salon Media Group (Nasdaq: SALN) got a much-needed boost after the close of trading Thursday, in the form of a US$2.5 million cash infusion from a group led by the investment firm WR Hambrecht & Co. and its chairman, Bill Hambrecht.
Salon made the announcement as it reported a crushing 45 percent year-over-year drop in revenue for the first quarter ended June 30th, to $1 million.
Salon, which recently began charging a fee for access to some of the features of its online magazine, also said it will lay off 14 employees and begin charging for its "Table Talk" discussion board.
Adobe Systems (Nasdaq: ADBE) chairman John Warnock, the McKay Investment Group, Alacrity Ventures and Constellation Ventures are also part of the investment group, Salon said.
Salon president and chief executive officer Michael O'Donnell said the financing, which the company said was a "first phase," is meant to help it survive the current Internet shakeout and hopefully achieve profits.
Tough Times
"Given the difficult financing climate, this latest investment by an impressive group of investors is a major endorsement for the Salon brand and its long-term potential for shareholders," O'Donnell said.
Adobe's Warnock and other members of the investment group will join Salon's board as the company struggles to boost its stock price, which has fallen to 44 cents at Thursday's close from its 1999 initial offering price of $10.50.
The stock is in present danger of being delisted from the Nasdaq exchange.
"Salon has demonstrated a fiscal discipline to manage in tough times," Bill Hambrecht said.
Tapping the Well
Salon said it has signed up almost 12,000 subscribers to its premium subscription service in the first 90 days of operation. The service, which costs $30 a year, gives readers access to certain stories on the e-zine's Web site, and also allows them to view the site without pop-up advertisements.
Salon already charges for access to "The Well," an online discussion area, and has been looking to boost revenue from subscriptions to offset declining advertising revenue.
Revenue Slips
The company posted a net loss of $2.9 million, or 22 cents per share, compared with a loss of $4.5 million, or 36 cents, in the year-earlier quarter.
The latest results included a charge of $800,000, or 6 cents per share, to write down the value of software development costs and the costs of the acquisition of MP3Lit.com, an audio service.
"During the quarter, the company was focused on securing financing to continue," O'Donnell said.
According to O'Donnell, the Internet advertising market
will rebound and "become a huge market."
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