Where Will Jim Cramer’s Primary Responsibilities Go? (TSCM)

TheStreet.com Inc. (NASDAQ: TSCM) reported lackluster earnings after yesterday’s close with a third quarter loss of $0.04 per share as revenue rose 4% from a year earlier to $16.7 million.  But more importantly, Jim Cramer is now going to be the Chairman of the Board at TheStreet.com after the board decided to split the chairman and CEO roles.  Thomas J. Clarke Jr. previously held both positions before this announcement. 

Many on Wall Street have always said that Cramer was always the head honcho at TheStreet.com and this may just be a formality at this point.  But it also brings up the case where you have to wonder if Jim Cramer will have to better segregate his efforts between TheStreet.com and CNBC for his MAD MONEY and break-in segments throughout the day.

There is a problem in this arrangement that did not exist a year ago and didnot exist when CNBC’s MAD MONEY first came on the air and startedcreating large daily moves in individual stocks.  TheStreet.com is nolonger just TheStreet.com website combined with RealMoney.com.  It hastaken on more of a full financial media offering package and now includes suchproperties as Stockpickr.com, BankingMyWay.com, MainStreet.com,Rate-Watch.com and Promotions.com.  The company also does a lot ofmultimedia for TheStreet.com TV and many videos on the site alreadyhave Jim Cramer on for quite some time.

Yesterday’s earnings were a disappointment, so Cramer is going to betaking on more formal oversight while Clarke has to scramble faster andfaster.  The company last year in the same quarter posted a profit of$3.8 million, which was $0.13 per share.  The company wasexpected to post earnings of $0.06 per share and $19.2 million in revenue, so this was areal shortfall because of the tough environment.  The company has saidthat this is the impact of the weakened online advertising market andit is reviewing its operating costs ahead as a result.

Marketing-services revenue fell 7% yr/yr to $6.5 million, but itsadvertising revenue gained 18% to $5.4 million.  Its interactivemarketing-services revenue from Promotions.com added $1 million.

Revenue from paid services gained 11% to right at $10.2 million, andthe company noted that growth in syndication, licensing and informationservices more than offset the decline in subscription services.Syndication, licensing and information-services revenue more thantripled to $2.8 million from $800,000.00, while subscription servicerevenues fell about 8% to $7.4 million.

Cash flow from operations was $1.8 million, with negative free cashflow of $100,000.  TheStreet.com finished the quarter with roughly $80million in cash and no bank debt, so its $118 million market cap is notmuch above its net value if the online financial content service canget back to positive earnings.

So what is interesting here is that this new official chairman title isgoing to formally add on more responsibility which will take on therequirement of more time and will also put Cramer possibly even more inthe hot seat.  He is considered THE PRODUCT at the company, and runningthe official oversight of company on top of it won’t be an easy task.If Cramer wants to feasibly accomplish everything here, he is going tohave to chisel off some more time from his sleeping hours.

Jon C. Ogg
October 30, 2008