Motley Fools Bemoan Free Porn

[gonzo]

--fool.com

Like many of its adult-entertainment actresses, New Frontier Media (Nasdaq: NOOF) is going topless.

How far do you have to read into this morning's earnings release to see how much the randy entertainer generated on the top line this past quarter? All the way, baby. New Frontier doesn't show us its sales until the income statement at the end, alerting investors that net revenue fell by 11%, to $12.6 million.

What a tease you've become, New Frontier. I realize that this is a far cry from the $14.6 million that Wall Street was expecting, but there's no harm in spelling that out from the beginning. The net profit of $0.08 a share, thankfully announced in the opening paragraph, is better than the $0.07 a share it earned a year ago, but short of the $0.09 analysts expected to see.

The report itself is quite the striptease.

Income investors will no doubt bail as the company axes its dividend. Saying goodbye to the chunky 9.8% yield, New Frontier tries to sugarcoat the move by suggesting that the money will be deployed to the "recent influx of opportunities" that exist in European distribution.

It's easy to see why New Frontier is hungry for the overseas market. We're spent closer to home. Transactional television and film production revenue dipped during the quarter. The company's direct-to-consumer business was flat at $0.5 million. (This used to be called its Internet segment.)

I guess it just got embarrassing to have a lack of growth in cyberspace. New Frontier isn't alone. The online arm of Rick's Cabaret (Nasdaq: RICK) and the soft-core masters at Playboy (NYSE: PLA) are also struggling on the World Wide Web.

The culprit? Too many sites are giving smut away.

I was a bit surprised to see that several free adult websites have crept into Alexa.com's traffic ratings of the 100 most visited websites in the country.

YouPorn.com is generating more traffic than New York Times' (NYSE: NYT) website.

RedTube.com is trumping Apple's (Nasdaq: AAPL) Apple.com.
Pornhub.com is outdrawing Netflix (Nasdaq: NFLX).

The Internet was supposed to be a no-brainer for companies like Playboy, but penny-pinching surfers seem to have no problem settling for free amateur titillation.

New Frontier may very well be onto something with its European push, but the sad reality is that this is starting to feel more like a retreat than a tactical push. The public companies are failing because the hobbyists are giving it away.