Friday, March 16, 2012

Carbonite crashing after Limbaugh trashing Stock now sits at 60% off its 2011 high mark – company CEO big liberal donor

lPosted by BH 


Carbonite, the Internet backup/security company, may be a good place to securely store irreplaceable computer data, but it’s not proving to be a good place to invest irreplaceable dollars.
The company, which went public last August, has seen its stock dive 20 percent after Carbonite CEO David Friend criticized Rush Limbaugh in the wake of the Sandra Fluke flap. Limbaugh’s dismissal of Fluke as a “slut,” in the wake of her call for the federal government to pay for her contraceptives, resulted in Carbonite withdrawing its advertising from Limbaugh’s highly successful show.
The plunge caused MarketWatch’s Chuck Jaffe to call Carbonite “the Stupid Investment of the Week.”
Whether due to a backlash or boycott by Limbaugh’s supporters or loss of access to Limbaugh’s large national audience, Carbonite has paid a price in the marketplace.
The company’s initial IPO price of $10 per share soared to $21.10 before beginning its steady decline. Before the Fluke flap, it had pulled back to less than it’s initial IPO price, but post-Fluke, it took a rapid 20 percent drop, settling this week at nearly 60 percent off its 2011 peak.
Friend’s venture into the political arena cost his shareholders dearly.
The Washington Times noted Friend has a long history of contributing to left-leaning candidates and causes. Citing Accuracy in Media, the Times reports Friend donated generously to the Howard Dean, John Kerry, and Barack Obama presidential campaigns, as well as several 527 groups such as “America Coming Together,”, and “Texans for Truth.”
The latter organization, funded by George Soros through, released an ad accusing George W. Bush of evading his National Guard Service. A day latter, “Dan Rather and CBS’ 60 Minutes did their program based on the bogus National Guard documents.”

1 comment:



    This dot-com disaster was doomed well before Rush Limbaugh’s dust-up with Sandra (pay-for-my-birth-control) Fluke.

    Carbonite’s first public Annual Report (for 2011) reveals a seven-year-old company sliding into to insolvency.

    NASDAQ:CARB reports that it is $100 million in the hole, burning $2 million per month, and that there is no end in sight to its losses!

    “We experienced net losses of $19.2 million for 2009, $25.8 million for 2010, and $23.5 million for 2011, respectively, and have an accumulated deficit of $100.4 million as of December 31, 2011.”

    “We have not generally achieved positive cash flow from our operations or reported net income, and we do not expect to be profitable for the foreseeable future.”


    In mid-2011, Carbonite had vaporized $88 million of venture capital and had only six months to live ($11 million cash in the bank).

    So the dot-com announced a ‘Hail Mary’ IPO for $122 million – an amount that would have covered its losses and would have stuffed 18 months’ worth of cash into its nearly-empty piggy bank.

    But Carbonite wound up getting only $55 million of new cash … and half of that came under the table from existing venture capital investors!

    The WSJ reports that there were serious disclosure delay issues associated with those venture capital insiders:

    “To get the deal done, online storage company Carbonite not only cut the offer price significantly, but it also sold nearly half of the new shares to existing investors.”

    “But these investors didn't fully disclose their larger ownership stakes for weeks, meaning the level of genuine, external interest in Carbonite's shares wasn't nearly as high as some may have thought.”


    Carbonite is an unlikely target for acquisition because of its $100 million “accumulated deficit” and $2 million monthly losses.

    Carbonite’s subscribers are free to migrate elsewhere without penalty – 1,000,000 of them will have the opportunity to leave in the next 12 months. Carbonite could in theory shrink to 1/6 of its current size during the next year. It will depend upon Limbaugh’s supporters.

    When its piggy bank is empty, Carbonite must either go bankrupt or be liquidated in a fire-sale auction of its tangible assets.

    By withdrawing its ads from his talk-radio show, Carbonite has spared Limbaugh the embarrassment of being associated with the collapse of a yet another grandiose “spectacular dot-com flameout.”


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