UPDATE 2-CNET loss widens but revenue up, shares rise

(Adds analyst quote, revenue, adjusted income, byline)

By Dana Ford

LOS ANGELES, Oct. 25 (Reuters) - U.S. media technology company CNET Networks Inc CNET.O reported a wider third-quarter loss on Thursday but posted a 7 percent rise in revenue and said it had sold its Webshots photo business to American Greetings for $45 million.

Shares rose more than 4 percent in after-hours trade and Sandeep Aggarwal, a senior research analyst at Oppenheimer, said the results topped his expectations.

CNET, publisher of a family of technology, lifestyle, and entertainment Web sites, posted a net loss of $16.6 million or 11 cents per share, compared with a loss of $2.3 million or 2 cents the year-earlier quarter.

The quarter's loss included a $19 million non-cash goodwill impairment charge plus costs associated with an investigation of the company's stock option granting practices. In September, the U.S. Securities and Exchange Commission closed its CNET investigation with no enforcement action recommendation.

Excluding those charges, CNET posted adjusted income of $6.9 million or 4 cents per share, compared with $9.9 million or 6 cents per share for the third quarter of 2006.

Revenue rose to $99.5 million, from $93.3 million a year ago and slightly topping Wall Street's average target of $99.36 million, according to Reuters Estimates.

CNET said it sold its Webshots business to American Greetings, effective immediately, for $45 million in cash.