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Jupitermedia (NASD: JUPM) just reported their full year and fiscal fourth quarter 2007 results. The company reported a slight revenue increase in 2007, but earnings per share came in at a negative $2.13 per share. This earnings number is discouraging and a bit misleading. Excluding their one-time charges and non-cash items, their earnings for the year would have been $0.06 per share.

There are two items to note regarding this release. First of all, the company is still producing a good deal of cash flow. Adding back depreciation, amortization, and their non-cash goodwill write-down, the company produced cash flow before capital items of over $0.62 per share. I look forward to their cash flow statement release so that I can determine a true “owner earnings” number and update my valuation of the company.

The second item to note, and this drives me crazy, is the impairment charge of $82.2 million, or $2.28 per share. Jupitermedia still has $143 million in goodwill on their balance sheet. Total shareholder equity is still $160 million, or $4.44 per share. Why write-down only $82.2 million? Maybe they can’t due to some accounting rule, but it is the season for massive write-downs of fake assets. Not only that, but the company provided no information about this impairment charge. What company that they purchased is now considered worthless? Or, what companies (plural)? I don’t think investors believed that the company had equity of $236 million at the end of last quarter, so why not be candid and forthcoming with shareholders now? Maybe the conference call will shed some light, but I would really like to hear from management about how and why things didn’t work out for whatever acquisitions that are now considered worthless.

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