Liquid Audio: Better off dead?

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...

Comments

Liquid Audio should die

[locarecords.com]

Seems to me time for Liquid Audio to die. There is no point throwing good money after bad and the shareholders can then invest in something new (if they aren't too scared off the Stockmarket ;-)

But then turkeys don't vote for Christmas and I'm sure that managers won't vote to sack themselves...

www.locarecords.com

They still exist?

[saihung]

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.

Re:They still exist?

[squaretorus]

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.

The Arguement

[evilviper]

The argument is that the business isn't going to work because there are too many competitors who do what Liquid Audio does but do it for free.

"Their business model doesn't work."

So, umm... Why did they invest in the company in the first place?

They had revenue?!

[eddy]

They had $150,000 in revenue?! That's insane. What did they do, rent out part of the office?

Re:They had revenue?!

[Xenopax]

Ironically enough, at my old start-up I think renting out office space was 95% of our revenue. I'm serious.

Re:The scoop

[JanneM]

For a public company, their responsibility is to make their owners/investors happy, and those are the stockholders. If the stockholders determine they want a profit, that's what the board is obliged to do. If the stockholders only priority is to have all company assets painted light blue, the board will hire painters. The stockholders can force a stockholder meeting (or simply wait until the yearly regular one), and vote to kill off the company and divide up the assets. They could also vote away the board of directors, realign the company as a healing-crystal business or whatever.

If a majority of votes (where the needed majority is regulated in the company charter) decides it is better to just throw in the towel than to continue, that's what will happen.

/Janne

Re:The buyout stinks

[cyberlotnet]

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.

Talk about Nerve

[mbone]

Let's see -

The CEO is making $ 500K per year.

Another co-founder is also making $500K per year.

All of this on revenue of $600 K per year.

And they say that shutting it down would ''...not represent[] the interests of all the shareholders.''

Do the words "bloated" come to mind ?

How about nervey ?

How about stupid ?

In my opinion much of the dot-com money was "value-subtracting," in that they took good money and did stupid things. Enough people did this that it poisoned the ability of real businesses to make real money, because the marketplace was conditioned to assume that things that cost money actually should be free.

I cannot think of a much better example of a value-subtracting business than Liquid Audio.

Shut it down.

Re:Ogg Vorbis

[Neon Spiral Injector]

The Liquid Audio files are fully Digital Rights Managed, I have one on my harddisk that I can no longer listen to, caues something changed on my computer.

The song sucked anyway, but the ammount of hassle it took to get the player installed (along with some funky sound card drivers (I think they are installed to try to keep listeners from playing to the harddisk instead of speakers) was increadable.

I'll never get another song in that format.

Re:The scoop

[mbourgon]

In related news, Microsoft has decided to close its doors, saying that Linux does what it does, for free. The xxx$ billion in the bank will go to its shareholders, who have been dumb enough not to insist on dividends, despite the fact that MS has xxx$ billion in cash.

We wish.

Re:Ogg Vorbis

[Artifex]

what are the technical leverages that Liquid Audio claims to offer vs. free competitors such as Ogg Vorbis

Pretty much just DRM, which means the music industry was happy to use it in promos for new releases, etc.

Yeah, piss it all away.

[Mulletproof]

My God, people, don't you realize the ace in the hole this company has? 90% of the dotcom's out there would kill for the hard capital this company has. In fact, it's the entire reason the .com bust happened-- All these companmies were venture capitaled to the hilt without any real assets of there own. When they hit the wall, they hurt their investors... Bad. Hell, after umpteen years of existance Amazon.com has only recently posted in the black. And don't think Bezos wasn't sweating bullets every day until that point, because if confindence for one minute faded in his ability, he was so far in the debt hole not even confidence could escape. Not your debt or my debt, but high millions debt. And that's not counting how he had to deal with his workforce (damn near 80% temps-- Hire em, fire em, hire em fire em...) to finally get above water. But for Liquid Audio to actually have assets... Unless the their problems were seriously irrecoverable, that's a major advantage to just piss away. I guess it's all about money now as opposed to long term success. Why not.