United Online (UNTD): Cash flows stabilizing at a good price

March 7, 2011

I have discussed United Online several times on this site, and noted that it has apparently attractive dividends and free cash flows, but that the loss of a post-transaction marketing program has affected their free cash flows in such a way that a prudent investor should wait and see how they regain their traction.

As it happens, my concerns were somewhat exaggerated, as the free cash flows for United Online have been hovering around $17 or $17.5 million per quarter pretty much ever since the post-transaction program was suspended, even though dial-up revenues and revenues from United Online’s classmates.com property have declined and capital expenditures have increased somewhat as the result of classmates.com rebranding itself into memorylane.com, a general nostalgia site. As a result, the company has a price/free cash flow yield of an impressive 13.8% which seems sustainable at least for the moment, although the success of the rebranding is still up in the air.

For my full opinion on United Online, please see



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