Long or Short Capital Reports Q3’07 Results

by Mr Juggles

Long or Short Capital’s fiscal 3rd Quarter ended on 4/30/07, and the company reported its results in a press release:

Mr Juggles: “Morning all. The third quarter was a transitional one for Long or Short. We took part in initiatives which had a negative short term impact on our financials, but which will position us for a higher level of long term sustainable earnings. Additionally, we put less focus on unadulterated traffic growth and more focus on user interaction. Lastly, we worked with our customers to squeeze working capital down to more efficient levels to drive cash flow. Any quarter would have been disappointment following the milestones we were able to blow out of the water in Q2’07, but I am proud to say that I think management proved in Q3 that we will not pander to short term financial metrics, unless it will increase value to subscriberholders, in which case we will pander to short term financial metrics.

Sequential same store traffic, our measure of organic traffic, showed a 5% positive trend against Q2. Considering that last quarter was our historical peak, it means this quarter is now our historical peak, and this is, clearly, historical. Our proprietary “Eyeball Monetization Conversion” ratio, a non-pageview measure of revenue generated per customer, decreased from $18.43 to $14.49, expected due to a scale-back in static advertising and other strategic initiatives which I will address later. Our EMCr still improved 67% on a year over year basis.

We generated earnings per subscriberholder of $0.91 compared to $2.12 in the second quarter and $0.60 in Q1. We generated $947 in revenue for the quarter, a 685% increase year over year, and slightly down sequentially. Our dosey-doe with Google Adsense and Yahoo Publisher resulted in yet another switch, this time from Yahoo to Adsense at the beginning of April. We made the switch due to our dissatisfaction with the relevance of Yahoo’s ads, as well as cost-per-click levels which were sub-twenty cents. We will continue to dynamically adjust to changes in the contextual ad market.

Text link advertising remains the stalwart of our topline, but it experienced a diminution. We sold a full load of Text Link Ads inventory in the second quarter. Subsequently, management determined that a substantial portion of that ad inventory was being delivered at sub-market rates with unreasonable contractual terms. We elected to reduce the ad inventory sold through that channel from 10 links to 1 link. This had a negative $350 impact on our topline. Management believes it is in Long or Short’s long term best interest to hold back supply while pushing for Google Page Rank 6, and then seek out premium pricing selectively. If you have the ability to link to us or coerce high page rank friends to link to us, this will help greatly in our efforts to achieve Page Rank 6, and only further the growth the amount of money we dividend to our readers and get us a step closer to feeling ok buying iPhones for our children’s stuffed animals.

We had one successful CPA campaign which we launched late in Q2 with Everybody’s Gonna Get Laid Except You and followed with “Buy Your GF Flowers Now. Get It Done“.

Our subscribership increased from 508 to 1012. Approximately half that is organic growth and half that resulted from a change in the way Google Reader shows up in susbscriber stats, namely that it does show up now.

Our free cash flow is something I am really proud of and thanks to the good work our finance department did in reaching out and shaking changes out of our customers (laughs), those slow paying mother (expletive), (laughs) (inaudible), we generated free cash flow of $1,417, an increase of 200% sequentially, and higher than our cumulative free cash flow up until the beginning of this quarter. We set a target on last quarter’s call for working capital to run in the 30-35% range and we like the progress we were able to achieve in just one quarter. We are exploring uses for our cash which include but are not limited to investments in regional financial humor producers, acquisition of competitors, complicated structures involving SPEs that would allow us to mislead potential investors, or one really nice corporate pen.

Transition doesn’t sound sexy, but let me tell you, it will be. By way of example, we are like that 7 coming out of college, you know the one, brunette with an ok body ok face and has never really put it altogether. Two years out of college, she is exercising twice a day, not-eating three healthy meals a day, she blondes her hair and learns how to get it done with makeup, and now she is a 9 plus and everyone is bidding up her assets. And how does she get that done? She transitions. And that is what Long or Short is doing, transitioning. Thanks for your time, and have a great night.”

Top Articles from the Third Quarter

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  5. Crazy Person or Bluetooth Headset?: The Home Game
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  7. Dogs Can Smell Fake DVDs and Other Malaysian Lies

Top Articles from the Second Quarter

  1. Vertizontal Consolidation
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  5. Joe Theismann Presents Monday Morning Investing
  6. Critical Mass Supplier
  7. Kaiser Falcon Eyes

Note that the financials below are unaudited and may contain non-GAAP measures. All numbers comply with Seldom Accepted Accounting Principles (SAAP).

Unaudited Financial Results for Q3’07
Income Statement

Contextual CPC Revenue $229
CPA Revenue $109
Static Ad Revenue $594
Other Revenue $15

Total Revenue $947

Cost of Sales $19.55
SAAP Income $926.9

Balance Sheet

Cash $1962
Accounts Receivable $302
Inventory $0.00
Prepaid Marketing/Hosting/Reg $146
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $1417
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 65,290
Pageviews 133,960
Clicks on ads 282
Subscribers by Email 159
Subscribers by XML 853
Inbound Links per Technorati 394 from 148 Sites
Technorati Rank 27,274
Inbound Links per Google ~399 sites
Google PageRank 5

Past Results (due to our reliance on SAAP, previous unaudited financial results are not reliable)
Long or Short Capital Q1’06 Results
Long or Short Capital Q2’06 Results
Long or Short Capital Q3’06 Results
Long or Short Capital Q4’06 Results
Long or Short Capital Q1’07 Results
Long or Short Capital Q2’07 Results

Also here is a look at our Google Spreadsheet Financials spread out quarterly. As you can see, we strictly adhere to SAAP.

Ad Sense Ad Sense


  1. Cincinnatus_C
    May 12th, 2007 | 12:52 pm

    What was the effect of currency translation on your financial results?

  2. arbman
    May 13th, 2007 | 9:43 am

    LameMan Brothers Equity Research

    Downgrading Long or Short Capital from 1-Overweight to 2-Equalweight on Dissapointing Quarter

    We are downgrading Long or Short from 1-Overweight to 2-Equalweight after the company missed our expectations of 20% quarter on quarter EPS growth in Fiscal 3Q 07. We know that the stock is going to be down a bunch today and if we downgrade it now we can claim credit (see, it went down after we downgraded it! Our analysts are brilliant!!!) even though its actually a good buying opportunity because underlying traffic metrics remained solid, content continues to be hilarious and growth in the online financial-humor market remains robust. When our clients call us up to ask why we downgraded the stock we will admit that we are spineless and couldn’t take the pain of being wrong and will secretly encourage them to continue buying the stock. If EPS resume their 20% growth rate next quarter we will upgrade LoS back to 1-Overweight the day the stock goes back up by 10%, thereby denying anybody who takes our research seriously the best buying opportunity out there in the stock. As a reward for all this great work, we are hoping some hedge fund decides to rescue us from this miserable existence and hires us for a job that requires real work instead of just being the bitch of the salesforce and the companies we cover.

  3. May 13th, 2007 | 10:47 am

    May 13, 2007

    Board of Directors
    Long or Short Capital

    Ladies and Gentlemen:

    Equity Private Equity Capital Partners, LLC advises various entities that control 9.75% of the shares outstanding of Long or Short Capital. As of this date this makes us Long or Short Capital’s largest single shareholder.

    Please do not mistake our ownership stake as a vote of confidence in present management.

    We find ourselves in the position of communicating with you via this public filing only because our repeated communications through other channels have been ignored.

    Our disappointment in Long or Short’s performance appears to be something other than unique. We had occasion today to notice the downgrade of Long or Short by LameMan Brothers Equity Research- primarily, it would seem, because of your complete failure to meet stated growth objectives.

    Given these failures and the lack of support by the analyst community it is difficult for us to understand the strategic thinking behind your proposed use of cash. Quoting your analyst call we find that:

    “We are exploring uses for our cash which include but are not limited to investments in regional financial humor producers, acquisition of competitors, complicated structures involving SPEs that would allow us to mislead potential investors, or one really nice corporate pen.”

    I think this statement stands for itself and demonstrates the complete lack of respect for your shareholders that has come to define the “Long or Short Equity Ownership Experience. ™” (Please note that we have trademarked this phrase in order to use as a coy reference to your dismal results in other 13-D filings designed to embarrass other targets of our activist strategies).

    Given the distinct unlikelihood that these investment proposals will result in any return to shareholders (in fact, shareholders would be better served with their money in treasuries given the low return on equity Long or Short is famous for), and the firm’s historically low capital expenditure requirements, we demand that a special dividend be declared in the amount of $1,200 and that the company embark on a stock buyback plan with $1,000 in committed capital. Further, we believe that the best course for the company is to monetize what revenue it has by increasing its debt load to facilitate these balance sheet adjustments.

    We also demand that the Board of Directors form a committee to investigate the sale of the entire business. Given the multiples claimed by current management, we find it hard to imagine why the current shareholders should be expected to wait for an economic downturn (or exposure of management’s incompetence) to be cashed out.

    We are also submitting a proposal for representation on the Board of Directors of Long or Short Capital. We have two highly qualified candidates which we are confident will meet with your approval. We are sure you are aware of the qualifications of Vice President Dick Chaney and Augusto Pinochet. While the later is presently deceased we are confident he will be a better steward of the shareholder’s capital than the present board.

    We are in the process of reviewing management performance, but at present have made no decisions on changes that may be required in that area.

    We look forward to working with you to unlock Long or Short’s oppressed value and liberate the shareholders from their present bondage.

    Best Regards,

    Equity Private
    Equity Private Equity Capital Partners, LLC

  4. Warenn Earl Bufet
    May 13th, 2007 | 1:05 pm

    Dear Juggles and Sir Equity Go,

    Thanks for your letter of May 12th.

    We’re always happy here in Omaha when the fedex guy tracks us down at Gorats when we’re relaying yet another amusing anecdote to an adoring yet supine financial press.

    As you know, I look for businesses with deep moats, low business risk, and enduring intrinsic value.

    I look at what you two boys have built and am reminded of a young Tom Murphy and Dan Burke at Capital Cities when they were just starting out.

    Chiefly, I am reminded of how me and Charlie advised them that buying underperforming television stations would be a better idea than starting a weblog.

    I understand you’ve got some upset shareholders pushing for a leveraged recapitalization and you’re looking for a “corporate home” for the business you’ve built.

    One of the advantages we can offer you here is a single owner with a long term view, who’s willing to let you continue to run the business as if it were your family’s sole asset.

    Consequently, I’ve convened the board and we’re agreed to issue new Class C shares for you at a ratio of 1 class C per issued and outstanding share of LoS Capital.

    While the C’s are not convertible into either A’s or B’s, at any ratio, nor do they represent any ownership claim on the equity of Barkshire, they are suitable for framing and will be the envy of any miniballer who sees one hanging from your wall.

    I hope this resolves the current unpleasantness surrounding the various get-rich-quick types and financiopaths circling your business.

    Looking forward to getting it done.


  5. lee
    May 14th, 2007 | 11:09 am

    How can we, as shareholders, be expected to trust these unaudited financial statements? I nominate Angst&Dung LLP as independent auditor for the next fiscal year’s results. Until I see a SAAP unqualified opinion I will complain on my blog and Yahoo message boards and not really do anything.

  6. May 14th, 2007 | 12:43 pm

    Dear Equity Private,

    First, I would point you to the documents which govern your subscriberholderstake. Whilst you may have been under the impression that our float was like any other float with the same type of positive rights, this impression is mistaken not unlike most impressions formed by your gender.

    As a subscriberholder, you are being granted Class B or Class C shares in Long or Short Capital LLC. You should probably realize that Class A shares (there is actually only one Class A share and it’s held by Mr Juggles) have perfty-perf multiplied by infinity votes per share compared to 1.25 votes per share for Class B and Class C

    I know you have an Easy Bake calculator so the math should be clear that your voting rights are de minimis.

    Second, we will thoroughly consider all the initiatives you have recommended.

    Third, as to our management squad and its effectiveness, we just point to the scoreboard, for proof of our effectiveness. In every single metric we have improved Div/0 % since fiscal year 2005. We challenge you to find another management team who has “stewarded” a manufacturer and distributor of online abstract financial humor with a “Long” in the name. It simply has not been done and this is undisprovable.

    Fourth, we have thoroughly reviewed all the initiatives you have recommended, and reject them.

    Fifth, to all the subscriberholders who would be fooled by Equity Private’s siren song, note that due to voting rights, she is a Don Quixote figure. Furthermore, we do not recommend trusting someone who:

    1) Claims 1 million “hits” over a period in which LoS, her competition, has had 350,000 pageviews. This discrepancy is especially puzzling due to the fact that we have the same amount of RSS subscribers and a look at Alexa indicates that we have higher traffic levels.

    2) Bleeds monthly but does not die.

    We hope subcriberholders can trust us more than a person of this ilk.

    Management will take whatever steps it deems necessary to squash this sort of “activism” by minority subscriberholders. Not because we think it destroys value, but because we love power and intend to retain it.

    Mr. Juggles
    MFCEO Long or Short Capital

  7. May 14th, 2007 | 12:57 pm

    Warenn Earl Bufet,

    Your offer intrigues me. I’d like to subscribe to your newsletter. What kind of moats would you build for a purchased LoS? As you know, anyone can do this. But only one group can do it smartlier than everyeone else.

    Mr. Juggles,
    MFCEO Long or Short Capital

  8. May 14th, 2007 | 1:11 pm


    Our fx impact was (inaudible).

    Thanks for the question.

    Mr. Juggles,
    MFCEO Long or Short Capital.

  9. nm
    May 14th, 2007 | 1:29 pm

    “have perfty-perf multiplied by infinity votes per shares”
    When did voting rights of the Class A share change from perfty-perf to perfty-perf multiplied by infinity. Was that like May 13th, 10:48 am?

  10. Cincinnatus_C
    May 14th, 2007 | 1:31 pm

    What does the MF in MFCEO stand for? ‘multi-faceted’?

  11. May 14th, 2007 | 1:32 pm


    But why would a Wookiee, an eight-foot tall Wookiee, want to live on Endor, with a bunch of two-foot tall Ewoks?

    Mr. Juggles
    MFCEO Long or Short Capital

  12. nm
    May 14th, 2007 | 3:29 pm

    Thanks Mr. Juggles, I needed that for my model.

  13. Kilian
    May 15th, 2007 | 1:14 pm

    “Oh no, the Chewbacca defense! He used that to get OJ off”