Thursday, May 18, 2006

REDF Reports Quarterly Results-The Glass is Half Full, or Half Empty?

Rediff reported their quarterly results for quarter ending March 31. The stock got thrashed on the news, closing down 15%.

India online revenues grew by 69% to $3.57M. The net income was about $0.5M, or $0.02 per share. Registered users increased 20% to 43M. See full story here.

Investors obviously are fretting about the slower growth of India Online Revenues. Previous quarters have shown growths of about 80%, and this quarter with 69% growth is a bit disappointing.

The good news is the registered user increase-a steady 20% is great. From an investor standpoint, it is okay to not be able to monetize the users for a couple of quarters; it is not okay if the registered users growth slows down. The management should focus more on the brand and not worry about spending a few million dollars promoting it; the long term payoffs are immense. Yahoo India is a formidable competitor, and SIFY also has some say, but Rediff.com for now dominates the Indian Market. If they stay that way, the company will be worth many billions of dollars; if they lose out to Yahoo India or Sify.com, they will basically become the Lycos or Earthweb of the .com India.

Sanjay John G.


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