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Thursday, May 1, 2008

Digital River (DRIV) 1Q:2008 results

Digital River hits the number, guides FY EPS to $1.89, which is almost consensus if you back out an outlier or two who didn't get the call from the company. They clearly made outbound calls to the street to point out their dependence on interest income as 5 analysts woke up in a 3 day period and changed their models to reflect lower interest income assumptions. Coincidence?? No. They didn't want the stock to crater when they put their guidance out there.

Guidance is in-line for next quarter on rev basis with higher expenses possibly driving the eps a nickel below. The full year is in line with consensus EPS on higher revenue. (Initially I said it was in line guidance).

I like digital distribution... of almost anything. I think Amazon should buy these guys already. There's a giant addressable software market, bandwidth at the consumer and corporate level can stomach the downloads. Software is an all margin business -- except for the packaging and shipping. There's a savings split in there somewhere between content guys and Amazon. Make it so.

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