Diamonds and Dogs
6/13/12Constant Contact Inc. (CTCT)
Constant Contact had constant contact with the bottom of the market today, down 14.96% at $16.60. The company has acquired privately owned Single Platform, a smaller company that helps small businesses get discovered through Web and mobile searches. Constant Contact paid $65 million in cash, plus another $5 million in cash and equity compensation for employee retention. If Single Platform hits certain revenue targets, Constant Contact will also have to pay an additional $10 million to $30 million. Usually acquisitions are seen as good news by investors however this one had a problem. Following the transaction, Constant Contact updated its guidance. Second-quarter revenue shouldn't see any material impact, but the company will incur $1 million in acquisition-related expenses. This caused Constant Contact to reduce its adjusted EBITDA forecast from a prior range of $45.8 million-$46.9 million to a new ballpark of $35.4 million-$36.7 million. The lower guidance caused investors to shy away from any contact with this stock.
KIT Digital Inc. (KITD)
KIT Digital is explosive today up 18.69% at $4.00. The company saw a pop in its stock earlier today when it announced that it was looking for buyers. Kit Digital appointed a special committee to review unsolicited interest from a couple of suitors and named Deutsche Bank Securities Inc. as its financial adviser to help explore a potential sale. The company, which provides its services to some of the biggest technology, entertainment and media companies in the world including Google, HP, Disney-ABC, MTV and BBC, has reported losses for five straight years. The stock has lost more than half of its value over the past three months. The potential purchase of KIT has sparked investor interest today, and sent shares up around $0.66. KIT had a great day while the market closed lower.