MOUNTAIN VIEW, Calif. — Geeknet, Inc. (Nasdaq: LNUX), the online network for the global geek community, today announced financial results for its fourth quarter and year ended December 31, 2009.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20091104/SF04925LOGO)

Total revenue for the fourth quarter of 2009 was $32.6 million compared to $24.8 million of revenue for the fourth quarter of 2008.  Net income for the fourth quarter of 2009 was $1.5 million or $0.03 per share compared to a net income of $2.6 million or $0.04 per share, for the same period a year ago.

Adjusted EBITDA for the fourth quarter of 2009 was $2.8 million, compared to adjusted EBITDA of $2.6 million for the same period a year ago.  A reconciliation of our net income as reported to adjusted EBITDA is included in this release.

“Geeknet closed the year with a solid fourth quarter as we realized some of the benefits associated with our numerous investments in 2009,” said Scott L. Kauffman, President and CEO, Geeknet.  “In particular, ThinkGeek delivered record revenues driven by an increased focus on marketing and awareness.  The fourth quarter results validate my belief that our strategy to reinvigorate the company is gaining traction with both our consumers and our advertisers.  We expect these trends to continue in 2010.”

Revenue for the twelve months ended December 31, 2009 was $65.6 million compared to $59.4 million for the comparable period in 2008.  Net loss for the twelve months ended December 31, 2009 was $14.0 million or $0.23 per share compared to a net loss of $4.8 million or $0.07 per share for the comparable period a year ago.  Net loss for the year ended December 31, 2009 includes a $1.2 million loss resulting from the write-off of internally developed software and a $4.6 million impairment charge for the Company’s investment in CollabNet.  Adjusted EBITDA for the twelve months ended December 31, 2009 was $3.6 million loss compared to adjusted EBITDA of $0.2 million for the comparable period a year ago.

Fourth Quarter Highlights:

• Media revenue was $4.7 million for the fourth quarter of 2009, compared to $5.1 million for the fourth quarter of 2008.  Revenue for the fourth quarter of 2009 included $2.3 million from our premium advertising products compared to $1.1 million of revenue from premium advertising products for the same period last year.
• E-commerce revenue increased 42 percent to $27.9 million for the fourth quarter of 2009, compared to $19.7 million for the fourth quarter of 2008.
• Total cash and investments, including restricted cash, at the end of 2009 was $39.4 million.

Supplemental schedules of the Company’s quarterly statements of operations and operational statistics for the quarterly periods in the years ended December 31, 2008 and December 31, 2009 are available on the Company’s web site at geek.net/cyresults.

A conference call and audio webcast will be held at 8:00 a.m. PT or 11:00 a.m. ET on February 11, 2010 and may be accessed by calling 877-407-8033 or 201-689-8033 or by visiting geek.net.  Replays of both the telephonic audio and audio webcast will be available for 90 days.  To access the conference call replay, dial 877-660-6853 or 201-612-7415, referencing replay account 286 and call ID 342802.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, we also report adjusted EBITDA.  Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.  We believe that adjusted EBITDA provides useful information to both management and investors and is an additional measurement which may be used to evaluate our operating performance.  Our management and Board of Directors use adjusted EBITDA as part of their reporting and planning process and it is the primary measure we use to evaluate our operating performance.  In addition, we have historically reported Adjusted EBITDA or non-GAAP earnings, from which adjusted EBITDA can be derived, to the investment community.  We also believe that the financial analysts who regularly follow and report on us and the business sector in which we compete use adjusted EBITDA to prepare their financial performance estimates to measure our performance against other sector participants and to project our future financial results.

We define adjusted EBITDA as net loss which is adjusted for interest and other income (expense) net and income taxes as well as stock-based compensation, restructuring charges and depreciation and amortization.  The method we use to produce adjusted EBITDA is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.  Adjusted EBITDA, as we compute it, excludes certain expenses that we believe are not indicative of our core operating results, as well as income taxes, stock-based compensation and depreciation and amortization.  We consider our core operating results to include revenue recorded in a particular period and the related expenses that are intended to directly drive operating income during that period.

The EBITDA calculation excludes interest, income taxes and depreciation and amortization by its nature.  In addition, when we compute adjusted EBITDA we exclude stock-based compensation and restructuring charges and other amounts included in the Interest income and other income (expense) net caption as we believe that these amounts represent income and expenses that are not directly related to our core operations.  Although some of the items may recur on a regular basis, management does not consider activities associated with these items as core to its operations.  With respect to stock-based compensation, we recognize expenses associated with stock-based compensation that require management to make assumptions about our common stock, such as expected future stock price volatility, the anticipated duration of outstanding stock options and awards and the rate at which we recognize the corresponding stock-based compensation expense over the course of future fiscal periods.  While other forms of expenses (such as cash compensation, inventory costs and real estate costs) are reasonably correlated to our underlying business and such costs are incurred principally or wholly in the particular fiscal period being reported, stock-based compensation expense is not reasonably correlated to the particular fiscal period in question, but rather is based on expected future events that have no relationship (and in certain instances, an inverse relationship) with how well we currently operate our business.  Restructuring costs are excluded from adjusted EBITDA because they represent non-cash charges which are not representative of our core operations.

About Geeknet, Inc.

Geeknet is the online network for the global geek community.  Our sites include: SourceForge, Slashdot, ThinkGeek, Ohloh and freshmeat.  We serve an audience of more than 40 million users* each month and provide the tech-obsessed with content, culture, connections, commerce, and all the things that geeks crave.  Want to learn more?  Check out geek.net.

*(Source: Google Analytics and Omniture – December 2009)

Geeknet is a trademark of Geeknet, Inc.  SourceForge, Slashdot, ThinkGeek, Ohloh, and freshmeat are registered trademarks of Geeknet, Inc. in the United States and other countries.  All other trademarks or product names are property of their respective owners.

NOTE REGARDING FORWARD-LOOKING STATEMENTS:  This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on our current expectations, and involve risks and uncertainties.  Forward-looking statements contained herein include statements regarding our growth strategies and prospects for our online media and e-commerce businesses.  Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including:  our ability to attract and retain qualified personnel; success in designing and offering innovative online advertising programs; decreases or delays in online advertising spending, especially in light of current macroeconomic challenges and uncertainty; our effectiveness at planning and managing our e-commerce inventory; our ability to achieve and sustain higher levels of revenue; our ability to protect and defend our intellectual property rights; rapid technological and market change; unforeseen expenses that we may incur in future quarters; and competition with, and pricing pressures from larger and/or more established competitors.  Investors should consult our filings with the Securities and Exchange Commission, sec.gov, including the risk factors section of our Annual Report on Form 10-K for the year ended July 31, 2008, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, for further information regarding these and other risks of our business.  All forward-looking statements included in this press release are based upon information available to us as of the date hereof, and we do not assume any obligations to update such statements or the reasons why actual results could differ materially from those projected in such statements.

                                  Geeknet, Inc.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)                  

                                            Three Months
                                               Ended            Year Ended
                                            December 31,       December 31,
                                           -------------      -------------
                                            2009    2008      2009     2008
                                            ----    ----      ----     ----
     Media revenue                         $4,685  $5,123   $16,486  $19,781
     E-commerce revenue                    27,949  19,666    49,091   39,666
                                           ------  ------    ------   ------
       Net revenue                         32,634  24,789    65,577   59,447
                                           ------  ------    ------   ------ 

     Media cost of revenue                  1,698   2,163     6,953    8,224
     E-commerce cost of revenue            20,336  14,969    38,151   31,053
                                           ------  ------    ------   ------
      Cost of revenue                      22,034  17,132    45,104   39,277
                                           ------  ------    ------   ------
      Gross margin                         10,600   7,657    20,473   20,170
                                           ------   -----    ------   ------ 

    Operating expenses:
      Sales and marketing                   4,307   2,872    11,775    9,390
      Research and development              2,287   1,572     8,103    5,426
      General and administrative            2,256   2,118     8,843   11,136
      Amortization of intangible assets        90       -       200        -
      Restructuring costs                     (62)      -       (62)     765
                                              ---     ---       ---      ---
        Total operating expenses            8,878   6,562    28,859   26,717
                                            -----   -----    ------   ------
    Operating income (loss)                 1,722   1,095    (8,386)  (6,547)
    Interest and other income
     (expense), net                            48   1,652    (5,495)   1,849
                                              ---   -----    ------    -----
    Income (loss) before income taxes       1,770   2,747   (13,881)  (4,698)
    Provision for income taxes                242     195       140       83
                                              ---     ---       ---      ---
        Net income (loss)                  $1,528  $2,552  $(14,021) $(4,781)
                                           ======  ======  ========  ======= 

    Earnings per share:
      Basic and diluted                     $0.03   $0.04    $(0.23)  $(0.07)
                                            =====   =====    ======   ====== 

    Shares used in computing earnings
     per share:
      Basic                                60,086  65,750    60,801   67,469
                                           ======  ======    ======   ======
      Diluted                              60,733  65,790    60,801   67,469
                                           ======  ======    ======   ====== 

    Reconciliation of net income (loss) as
     reported to adjusted EBITDA:
    Net income (loss) - as reported        $1,528  $2,552  $(14,021) $(4,781)
    Reconciling items:
      Interest and other income
       (expense), net                         (48) (1,652)    5,495   (1,849)
      Provision for income taxes              242     195       140       83
      Stock-based compensation expense
       included in COGS                        74      92       319      297
      Stock-based compensation expense
       included in Op Ex.                     568     817     2,332    3,593
      Restructuring costs                     (62)      -       (62)     765
      Depreciation and amortization           520     588     2,157    2,088
                                              ---     ---     -----    -----
    Adjusted EBITDA                        $2,822  $2,592   $(3,640)    $196
                                           ======  ======   =======     ==== 

                                 Geeknet, Inc.
                     CONDENSED CONSOLIDATED BALANCE SHEET
                                (In thousands)                            

                                             December 31,        December 31,
                                                2009                 2008
                                             ------------        ------------
                 ASSETS                                                   

    Current assets:
      Cash and cash equivalents                $28,943            $40,511
      Short-term investments,
       including restricted cash                10,408                563
      Accounts receivable, net                   4,299              4,418
      Inventories                                5,280              3,264
      Prepaid expenses and other
       current assets                            3,564              1,841
                                                 -----              -----
        Total current assets                    52,494             50,597
    Property and equipment, net                  2,569              4,748
    Long-term investments, including
     long-term restricted cash                       -              9,947
    Other long-term assets                       5,088              8,874
                                                 -----              -----
    Total assets                               $60,151            $74,166
                                               =======            ======= 

        LIABILITIES AND STOCKHOLDERS' EQUITY                        

    Current liabilities:
      Accounts payable                          $5,763             $4,021
      Accrued restructuring liabilities          1,238              2,862
      Deferred revenue                             928                591
      Accrued liabilities and other              3,854              2,702
                                                 -----              -----
        Total current liabilities               11,783             10,176
    Other long-term liabilities                    103              1,423
                                                   ---              -----
    Total liabilities                           11,886             11,599
                                                ------             ------ 

    Stockholders' equity:
      Common stock                                  61                 65
      Treasury stock                              (492)              (331)
      Additional paid-in capital               798,917            799,037
      Accumulated other comprehensive income        13                  9
      Accumulated deficit                     (750,234)          (736,213)
                                              --------           --------
        Total stockholders' equity              48,265             62,567
                                                ------             ------
    Total liabilities and
     stockholders' equity                      $60,151            $74,166
                                               =======            ======= 

                                   Geeknet, Inc.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In thousands)

                                           Three months
                                              ended           Year ended
                                           December 31,       December 31,
                                           ------------       ------------
                                          2009     2008      2009     2008
                                          ----     ----      ----     ----
    Cash flows from operating
     activities:
      Net income (loss)                 $1,528   $2,552  $(14,021) $(4,781)
      Adjustments to reconcile net
       income (loss) to net cash
       provided by (used in)
       operating activities:
        Depreciation and amortization      520      588     2,157    2,088
        Stock-based compensation expense   642      909     2,651    3,890
        Provision for bad debts            (51)     (52)       46       28
        Provision for excess and
         obsolete inventory                (17)     (99)       17        4
        Provision for return for
         allowance                         258      167       258      167
        (Gain) loss on disposal of
         assets                              -     (548)    1,020     (545)
        Loss on sale of investments          -        -         -      308
        Change in fair value of
         financial assets                    -     (601)        -     (601)
        Impairment of investments            -        -     4,585      108
        Non-cash restructuring
         expense                           (62)       -       (62)     765
        Changes in assets and
         liabilities:
          Accounts receivable           (1,157)      75        78     (668)
          Inventories                     (395)     799    (2,033)     201
          Prepaid expenses and other
           assets                          370    1,149      (471)    (187)
          Accounts payable               1,751    1,319     1,735     (500)
          Accrued restructuring
           liabilities                    (727)    (681)   (2,816)  (2,831)
          Deferred revenue                 158      (97)      337     (186)
          Accrued liabilities and
           other                         1,270      132       858      167
          Other long-term liabilities      (94)       4       (66)      18
                                           ---      ---       ---      ---
            Net cash provided by
             (used in) operating
             activities                  3,994    5,616    (5,727)  (2,555)
                                         -----    -----    ------   ------ 

    Cash flows from investing
     activities:
      Purchase of property and
       equipment                          (263)    (667)   (1,001)  (2,569)
      Purchases of marketable
       securities                            -     (430)        -  (26,871)
      Maturities or sale of
       marketable securities               100      935       659   50,861
      Acquisitions                           -        -    (2,613)       -
      Proceeds from sale of
       intangible assets, net                -        -       172        -
      Purchases of intangible assets       (16)       -      (122)       -
                                           ---      ---      ----      ---
        Net cash (used in)
         provided by investing
         activities                       (179)    (162)   (2,905)  21,421
                                          ----     ----    ------   ------ 

    Cash flows from financing
     activities:
      Proceeds from issuance
       of common stock                       -        -       259       18
      Repurchase of common stock             -   (3,210)   (3,195)  (3,452)
                                           ---   ------    ------   ------
            Net cash used in
             financing activities            -   (3,210)   (2,936)  (3,434)
                                           ---   ------    ------   ------ 

    Cash flows from
     discontinued operations:
      Net cash provided by
       operating activities                  -        -         -       42
                                           ---      ---       ---      ---
            Net cash provided by
             discontinued operations         -        -         -       42
                                           ---      ---       ---      ---
    Net increase (decrease)
     in cash and cash
     equivalents                         3,815    2,244   (11,568)  15,474
                                         -----    -----   -------   ------
    Cash and cash equivalents,
     beginning of period                25,128   38,267    40,511   25,037
                                        ------   ------    ------   ------
    Cash and cash equivalents,
     end of period                     $28,943  $40,511   $28,943  $40,511
                                       =======  =======   =======  =======