A controversial acquisition

Media giant Agora's share price dropped last week, despite the firm's announcement of good Q1 results. The firm, which publishes Gazeta Wyborcza daily, announced its $54.35 (zł.119.55) million purchase of Trader.com Polska on Wednesday and its share price dropped on the news, falling 7.3 percent to zł.37.45 on Thursday.

There was a slight correction on Friday as the share price reached zł.37.98.

"This transaction has a deep strategic justification, but at first glance the price tag is horrendous," Sobiesław Pająk, an analyst at IDM brokerage, told Reuters.

Trader.com operates four websites on property and automotive advertisements, including Domiporta.pl and Autotrader.pl. Agora will acquire a 100-percent stake of Trader.com from its Turkish owner Hurriyet.

"The takeover of Trader.com Polska fits perfectly with our development strategy for dynamic growth on the fastest developing advertising markets," said Marek Sowa, the president of Agora.

Xelion analyst Paweł Cymcyk told WBJ, "The market got scared that Agora had overpaid for Trader.com. It's linked with the situation last year when all new technology companies had really bad financial results. But the future lies in internet solutions and it is wise to invest in such companies because the branch will develop."

He added, "Nothing is as bad as it seems. I predict a correction in Agora's share price when the market sees that it was an investment with good prospects."

Agora's strong first quarter was driven by ad sales, which rose by 16.3 percent to zł.213 million. The firm's net profit rose to zł.18.5 million in Q1 and its revenues increased to zł.313.4 million, marking y/y growth of 31.2 percent and 3.5 percent, respectively.

Revenues from newspaper sales increased to zł.53.3 million, which is 4.5 percent more than in Q1 2007. Revenues from book and music CD sales fell by 52.5 percent.