What can half your market cap buy you these days? If you’re HandHeld Entertainment, and you’ve got a $29 million market cap, it’s a 9-year-old Web site full of a bunch of raunchy videos.
As we reported yesterday, HandHeld has acquired Rochester, N.Y.-based eBaum’s World for $17.5 million, mostly cash. A few notes from a conversation I had with HandHeld CEO Jeff Oscodar this afternoon:
- eBaum’s will be an anchor tenant of sorts among HandHeld’s other user-submitted entertainment Web sites, which also include Putfile.com, Holylemon.com, Dorks.com and FunMansion.com.
- HandHeld is on track to become cash flow positive by the end of the year. And they had better, as they are betting the entire company on eBaum’s: To finance the deal, they took on $24 million of convertible debt. Last quarter, HandHeld lost $2.9 million on $390,000 of revenue, almost all of which came from sales of a portable media playing gadget. Meanwhile, eBaum’s World made $1.6 million last year on $5.2 million of revenue.
- Oscodar isn’t worried about eBaum’s potential copyright problems — if there’s a complaint, they take down the content. But he notes: “One of the interesting ironies that occurs from time to time… the content that’s being complained about by the legal deparment is content that was actually submitted by the marketing department.”
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