Cash-strapped CDNow rose 5/16 to 3 13/16 Thursday after the music e-tailer said its site had a record 5.7 million unique visitors in February, up 23.2 percent from January. Unique customers totaled 3.5 million at month’s end, up from 3.2 million at the end of January. CDNow was the fifth largest shopping site in February, according to statistics firm Media Metrix, with an 8.1 percent reach among all Web users. It was also the only music site on the research firm’s top 10 list.
CDNow pointed out that its rising numbers came as most e-tailers saw a seasonal drop in traffic. Amazon.com saw 20.1 percent fewer visitors in February from a month earlier, and Barnes and Noble’s Web site had 7.4 percent less traffic, showing “CDNow’s music-destination model has experienced less exposure to retail seasonality than pure Internet retailers,” the company said.
CDNow customers also stayed on the site longer, the company said. “By providing our customers with the kind of sticky content that encourages repeat visits, CDNow generates 63 percent of its retail revenue from repeat customers,” said President and Chief Executive Officer Jason Olim.
Strong statistics notwithstanding, the company is in trouble. Its auditors attached a note to its latest financial filing questioning the company’s ability to stay afloat of its own accord. An agreement to merge with Columbia House, a joint property of Sony Corp. and Time Warner, fell through earlier this month, and the company is looking for a new buyer.
Olim said the search is “progressing” and that the company is “confident” its advisers will “identify an appropriate strategic partner.” In the meantime, the company said, it is rolling out a new operating plan to “significantly reduce” its cash burn rate.
CDNow shares are down from a 52-week high of 23 1/4, reached last summer.
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