Marchex Keeps Paying Dividend
By Zacks Equity Research
On Tuesday July 21, 2009, 10:30 am EDT
Companies:Akamai technologies inc.Google inc.Marchex, inc.
Most recently, the Board of Directors of Marchex Inc. (NasdaqGM: MCHX - News), a search and media company focused on vertical and local advertising, declared a regular quarterly dividend of $0.02 per share on its common stock. The dividend is payable on August 17, 2009 to shareholders on record as of the close of business on May 4, 2009. The current dividend yield is 1.9%.
Despite lower-than-expected first quarter 2009 results, Marchex has impressed us by continuing to pay a dividend to return more value to its shareholders. Most of its peers such as Akamai Technologies (NasdaqGS: AKAM - News) and ValueClick Inc. (NasdaqGS: VCLK - News) have not paid dividends as they have been hurt by the current economic recession and reduced consumer spending.
Meanwhile, to increase shareholders wealth, Marchex’s Board of Directors increased its stock repurchase program. During the first quarter of 2009, Marchex increased its stock repurchase plan by 2 million shares to 9 million shares. Additionally, the company repurchased 1.6 million shares of its outstanding Class B common stock for $5.6 million, bringing the total shares repurchased under its stock repurchase program to 7.6 million, or 21% of its outstanding common stock.
We expect the company to continue with its share repurchase program, which will also help boost its bottom line in future quarters. Marchex generated $4.2 million cash from operating activities and ended the March quarter with $25.8 million in cash and zero long-term debt. It also expects to generate positive cash flow in every quarter of 2009.
A strong balance sheet, sustainable dividends and focus on reducing operating expenses facilitate the company’s efforts to weather economic volatility. Marchex is poised to benefit from the shift in demand to performance-based advertising as the company differentiates itself from other search providers focusing on local advertisers. The company continually improves its operating leverage through increased investment in new products.
