July 26 (Bloomberg) -- Cnet Networks Inc., an online news and information provider, reported a second-quarter loss on costs from an investigation into backdated stock options.

The net loss of $76,000, or breakeven per share, compared with net income of $5.16 million, or 3 cents, a year earlier, San Francisco-based Cnet said today in a statement. Sales rose 5.2 percent to $97.2 million, missing the $100.6 million average estimate of 12 analysts surveyed by Bloomberg.

Cnet spent $2.9 million during the quarter on an internal probe of backdated stock options, which led to the restatement of 10 years of results. The costs led to an operating loss of $965,000, compared with a profit of $4.83 million a year ago.

``We lost a lot of momentum during the process of the investigation,'' Chief Executive Officer Neil Ashe said in an interview. ``We believe we do some really interesting things -- the ability to build engaging environments for people.''

Next year ``will prove to be a lot better than '07 and '06,'' Ashe said.

This quarter, sales will be $95 million to $103 million, while revenue for the year will be $405 million to $430 million. Analysts projected $104.5 million in sales for the third quarter and $434.6 million for the year.

Cnet plans to increase sales and profit by expanding brands such as TV.com, GameSpot and UrbanBaby, Ashe said.

Ashe, the former head of strategy, was named CEO in October 2006, replacing Shelby Bonnie, who left over his role in the option backdating. Ashe hired former Time Warner Inc. executive Jack Haire as a special adviser, named Jose Martin, formerly of Electronic Arts Inc., as senior vice president of human resources and appointed Andy Sherman general counsel.

Shares of Cnet fell 24 cents, or 2.8 percent, to $8.26 at 4 p.m. New York time in Nasdaq Stock Market trading. They have lost 9.1 percent this year.

To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net.

Last Updated: July 26, 2007 19:11 EDT