Green Taxi

An interesting article from Business 2.0/CNNMoney on the Marchex story.  The comments I’ve read on the article sure show the range of views on the Marchex stock currently.  While having steadily increasing revenues (above $30m USD per quarter), their $220k USD profit this year is difficult to support a $400m USD market cap business. 

They have a ton of great domains that make up solid assets (which the stock should not trade at a discount to), and I do not think they have much debt (maybe a mistake?) other than preferred equity, but their net profit growth is not large enough for an internet company.  That said, I do not think they should be purchased or broken up.  Considering they just released their OpenList developed sites in June, I do not think they have had the time to let those domains grow or the revenue from those to materialize.

I think rather than looking to be acquired, they should be on the prowl for either small subsidiaries with tools that they can throw into their system or otherwise other types of media that they can leverage upon as well.  They have some cash and could probably raise some debt fairly easily. 

But, they should wait until the next two quarters play out before doing anything.  If they start to see large growth from this recent release of generic domains, they could perhaps look to expand internally in other ways. 

Either way, the company is a solid company that has a ton of potential.  That is why it trades at such a high P/E.  I really hope they compete with the likes of Google, Yahoo, and Microsoft someday in terms of internet traffic, as well as DemandMedia.

*NOTE: This is not a directional sale or recommendation to buy or sell the stock, merely my view of a company I do not know enough about except to be involved in both the domaining and finance fields.