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Liquid Audio: Better off dead?

Posted by chrisd on from the well-yeah dept.

mgeneral writes "It seems so for the shareholders. Liquid Audio, had only $150,000 in revenue but managed to lose $5.6 million last quarter. Its main asset: A pile of cash. In fact, so much cash, that if they close the doors, they could pay back the shareholders more per share than the current stockprice...and thats exactly what some investors want them to do." We've run stories on Liquid Audio before...

13 of 172 comments (clear)

  1. Why not do something with it? by Kevin_ap · · Score: 1, Interesting

    Just having a big pile of cash is a wast. Why don't they just invest in something? At least they'd make a profit of that....

  2. They still exist? by saihung · · Score: 5, Interesting

    It would be refreshing to see the directors of a company admit that they have no idea how they can make any money and return whatever their investors ponied up. The shareholders own the company, and if there's not even a glimmer of hope of the company ever being profitable (with Liquid I'm not sure that there ever was, but that's a separate issue) then the best thing is to admit defeat, cut your losses while there's still anything to cut, and close your doors.

    1. Re:They still exist? by forgoil · · Score: 3, Interesting

      That money could in turn be invested in a new company with a better chance of turning in a profit. There are tons of inventions and ideas out there that need investment that by far outshines trying to make money on the internet or with software nobody is willing to pay for anyway.

      What the world needs is a new boom, like the .COM one, just this time in companies that got a clue what the hell they do.

    2. Re:They still exist? by squaretorus · · Score: 4, Interesting

      Wrong.

      The best thing is to find a new board of directors WHO HAVE A CLUE!

      Take easyJet. One of the most profitable and successful companies to come out of the internet age. All tickets booked online, along with some other innovations, allowed far cheaper seats, leading to a massive chunk of market share, even buying Go recently (Go was the British Airways budget airline).

      Stelios, the guy that set up easyJet, has left his position at the head of the company and will completely leave next year. EasyJet has brought in a team and a headman who know how to RUN a business, not just START IT UP. Stelios is off to start another business, easyJet is on its way to another successful year.

      With that kind of cash reserve, even with no IPR, facilities, or brand, you simply need an ambitious board with some GOOD ideas and the capability to pull it off.

      Then the shareholders should get much more than $1 for every $.7 in return. Easier said than done of course.

    3. Re:They still exist? by Rich0 · · Score: 2, Interesting
      the shareholders can sell their part of the company if they wish, for the market price, if it's smaller than the 'real' value of the firm tough luck

      If the majority of the shareholders want to hold on, I'm perfectly fine with that. However, it is the right of the shareholder majority to dissolve any corporation. There is no reason why everyone has to go down with a sinking ship. Ok, so maybe they were dumb for buying into the idea, or maybe there was just a change in the market. If their only asset is their capital, it should be dispersed - their capital is the property of the shareholders - not the employees. The employees are fully compensated when they collect a paycheck, and the customers are fully compensated when they buy the product. Nobody owes them anything more.

      It isn't the shareholders that will end up killing this company - it is the lack of a market for their product. You argue that down the road there might be a market for their product. Then buy their stock - it is bargain-priced. If everyone wanted to hang on, then there wouldn't be talk of dismantling the company. If the market won't clear up for a long time, then the fix is to dissolve the company, and then create a new one when the market actually exists (if it ever does).

  3. GPL ? by Lorens · · Score: 3, Interesting


    Now there's a dotcom the other way around!

    Now, if they decide to stop and give back the money, will they release the code as GPL?

  4. Liquid Audio in Japan by BJH · · Score: 3, Interesting


    Liquid Audio is infamous in Japan - it was one of the first two companies to be listed on the new Tokyo Stock Exchange "Mothers" board for venture companies; unfortunately, the relaxed listing rules allowed Japanese gangsters to get a foot in the door.

    Eventually, what happened was one of the company directors was kidnapped by the CEO(?), a rather interesting personage who was missing a chunk off one of his little fingers... for those of you familiar with Japan, that should immediately ring alarm bells ;)

    These days, they're called Cyber Music Entertainment. Their stock price peaked at around 1,590,000 yen in September 2000; these days, they trade at around 10,000 yen ...

  5. So? by neksys · · Score: 3, Interesting

    Most of the comments I've seen so far have been along the lines of "They should just give the extra money to ..." or "Invest it in...!". Incorrect - the fact of the matter is that many, many businesses have been, and still are in the exact same position. The only way to *keep* shareholders is to show you have enough money to still give them a return on their investment even if the company goes belly up. There are three trains of thought on this: 1) make up fake revenues, a la Enron, WorldCom, etc. 2) go flat broke up forget about the people who trusted you to make then richer, or 3) ensure that the people with a vested interest in your company has a reason to stay on board. Liquid Audio (for all their faults) should be commended for their commitment to the stakeholders, even at a loss to the company - its seems to be such a rare thing with all the business improprieties on CNN. Money is the name of the game, and whether you like it or not, making investors happy is the nature of the beast.

  6. Hearing a Johnny Cash song . . . by Ezubaric · · Score: 3, Interesting


    Liquid Audio has never had a big footprint. It needs to either fold or radically reinvent the purpose of the company.

    We need to move away from the Dilbertesque model of a company loosing money while it's growing but never having a plan for afterward. Unless Liquid Audio has some magic plan to emerge from its cocoon a beautiful profitable company, it will just burn money indefinitely. This cannot be good for anyone. That money should be invested in a more realistic venture.

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    I am an expert in electricity. My father held the chair of applied electricity at the state prision.
  7. Wrong -- It's called fiduciary responsibility by MyNameIsFred · · Score: 2, Interesting
    The board is required by law to act in the best interests of the shareholders. That means that they must try to make a profit.

    Now whether a specific company should close their doors is always a difficult to question, but if it is a reasonable alternative the board is required to consider it.

  8. Mitarotonda == Raider of the worst sort by Anonymous Coward · · Score: 2, Interesting
    ``It's a lousy deal,'' says James Mitarotonda, an investor and chief executive of MM Companies,

    Yep, it is indeed a lousy deal for everyone but Mitarotonda and MM companies, formerly known as musicmaker.com. Remember them? They were shut down a couple of years ago around the time that Mitarotonda and his company (BGC) took control. I doubt he's thinking of anything but lining his own pockets and acquiring a large portion of that money stockpile in order to take over and shut down yet another company.

  9. Re:The buyout stinks by cyberlotnet · · Score: 4, Interesting

    Ok before you take the time to try to post a smart comment to gather more karma.. READ THE STORY FULLY..

    They don't only get $3.00 per share, they also get stock in the new combined company...

    So they lose .40 cents per share, for the chance to make more money in the future.. This is the reason they invested there money in the first place...

    What we have here is a couple of stock buyers scared of the current market and looking to bail out all together, And in this case try to force every other stock holder to do the same.

    If instead they would hold on to the stock and "ride the wave" They have a chance at better returns in the future.

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  10. Re:a good idea that nobody wants by Da+VinMan · · Score: 3, Interesting

    You would think the major labels would take a lesson from this.

    They will take a lesson from it. It just won't be the lesson you expect. Instead of saying something like "This restricted format stuff just doesn't work", they'll say something like "Piracy is killing us".

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