[RawAlex]

What I find interesting is even the most generous suckup on the zoo is seeming to understand that AFF appears to be in serious trouble.

The basic problem: the purchase of AFF (and probably Danni Cash) was done entirely in debt. It is likely that Andrew and Lars were only going to get the big money when this whole deal went public. What they don't appear to have figured on was the world economy going to crap, the inability of the company to show a path to profitablity, and so on.

The IPO appears on the surface to be massively overpriced, as even a generous web value of twice yearly revenue is barely equal to the stock offering. There is little underlying asset value (except for the software used to the run the site and the database, which I suspect is packed full of dead profiles). Their inability over the past few years to raise non-membership revenues (such as by advertising) is a real problem as well. The vast majority of their users are on the "adult" side of the business, which means they can't even run google adsense on their pages. I find it pretty amazing that they are unable to work their traffic in a manner to raise more income from their users.

I also don't understand the traffic issues: If their signup rate overall is say 1 in 200 (being nice here), and they turn a couple of million users a year (1 million end of period users 20% churn means you turn them all twice a year, thus 2 million signups). That means they are managing at least 200 million direct program clicks a year, plus significant amounts of returning client traffic (say 20 visits per user, that is another 40 million hits a year). So with a quarter of a billion hits, it is shocking that they cannot seem to make any real income off that traffic.

Something isn't right - and it suggests that either traffic is way off, or they truly are not good traffic managers and never had anyone on staff to do it.