WWW- [smallcapinvestor.com]- Opportunity could be lurking in shares of small-cap New Frontier Media Inc. (Nasdaq: NOOF) after the stock was hammered recently in response to a weak earnings report.

Adult entertainment distributor New Frontier Media chose a bad time to report lackluster results. Amid an already skittish stock market, the small-cap company reported weaker-than-expected fiscal first quarter results on August 8, sending the stock tumbling. After putting together a solid 2006, New Frontier shares have now declined almost 40% year-to-date as investors have grown cautious about the company’s prospects.

While not nearly as well known as Playboy Enterprises, Inc. (NYSE: PLA), Boulder, Colo.-based New Frontier is a leader in the production and distribution of adult themed and general motion picture entertainment. Founded almost a decade ago, the company’s programming is today distributed by virtually every major cable and satellite TV operator via pay-per-view (PPV), video-on-demand (VOD) and emerging technologies like Internet Protocol TV (IPTV). All told, New Frontier’s programming collectively reaches 139 million households.

New Frontier entered the adult themed film production business with the acquisition of MRG Entertainment in February 2006 for $20 million in cash and stock. The MRG deal has expanded New Frontier’s portfolio of higher margin, less explicit erotic content. New Frontier has also been able to leverage its existing distribution relationships for distributing MRG Entertainment’s content. It was MRG, though, that was a driver behind New Frontier’s recent weak earnings report.