Bible.com Investor Sues Company For Lack Of Profit

The board of Bible.com claims that it is easier for a camel to pass through the eye of a needle, than to make money on the domain name, but an angry shareholder disagrees. From the article: "James Solakian filed the lawsuit in Delaware's Chancery Court against the board of Bible.com for breaching their duty by refusing to sell the site or run the company in a profitable way. The lawsuit cites a valuation done by a potential purchaser that estimated bible.com could be worth more than dictionary.com, which recently sold for more than $100 million."

Comments

There's an easy fix for this

[lwsimon]

If the company is unprofitable, then buy up a majority of the stock and run it how you want - or sell your own stock and go do something else.

No one is forcing investors to own this company.

Re:There's an easy fix for this

[cgenman]

Supposedly, the "investor" was given his shares because of a $400,000 debt that the owners could not pay back. Further, the site hasn't been developed because this shareholder has been fighting with the board about control over the company. So I'm guessing he would like to buy up the majority of the stock, if it were possible. Though I doubt he could dump his shares for the 400k they cost him.

Of course Bible.com is a bad business idea to begin with. Everyone has a bible, and there are basically billions of searchable bibles online. Religion tends to be face-to-face, or at least televised. Money in religion comes from donations, not advertising. And, of course, a domain name is not a business idea, it is a business asset. Without a real idea, there isn't a real business.

Re:There's an easy fix for this

[lgw]

Actually, it's completely legit to establish in your documents of incorporation that profit is not your chief goal - you can put moral duties first, and the board would then have a fiduciary duty to those goals over profit. No one does, because it makes it hard to find any investors if you do that.

Bible.com should really have done that, however, if thier intent all along was to focus on prophets over profits, and then the lawsuit wouldn't have merit.

Re:There's an easy fix for this

[pthisis]

In point of fact the current law is that, for for-profit firms, the board's responsibility is to maximize value to shareholders.

Unless they're in Revlon mode, the board's first legal responsibility is to act in accordance with the articles of incorporation (which may or may not prioritize shareholder value above other corporate goals).

What are "Christian business principles", exactly?

[Daniel Dvorkin]

I don't think they teach "sell that thou hast, and give to the poor" to aspiring MBAs these days.

He should read his own website

[x_IamSpartacus_x]

1 Corinthians 6:7
Lawsuits among Christians are a no-no in the Bible.

Re:What are "Christian business principles", exact

[AnonymousClown]

Chick-fil-a does it - they're not open on Sundays, treat their workers well, environmental stewardship, and other things that are branded "liberal" by the Fox News crowd and yet, they make boat loads of money doing things that others would think would eat into profitability and make one uncompetitive.

internet magic at work

[Drakkenmensch]

Why would anyone agree to buy the domain name for 100 million dollars when there is no clear way of monetizing it or making it a profitable venture? It's so 1997 to think that the normal rules of business do not apply to the internet, because it's a magical place where there is profit for all and every 50$ investment yields a billion dollar return.

As a matter of fact, you can

[Anonymous Coward]

Legally companies do have responsibilities to their shareholders. That is exactly how the system is designed to work. Shareholders are entirely within their legal rights to sue their companies for failing to make decisions which are likely to make the company profitable.

Maybe you think that on some sort of social level that isn't how it should work. To a lot of uneducated people, investing is paramount to gambling: you invest, you accept the risk, and then you win or lose, and that's it. But in the real world, investing is very different, and plenty of legal responsibility is heaped upon the board of directors to act in the investor's best financial interest.

Re:As a matter of fact, you can

[Anonymous Coward]

"If the company isn't returning as much profit as possible THAT QUARTER, you aren't fulfilling the obligations to the shareholder."

This is just anti-capitalist babble bullshit. There is absolutely zero such obligation, publicly traded or not. Boards have huge latitude in determining strategy for profits, timeframe for profits, scope of operations, and ethical stance. The board of P&G could say the following tomorrow morning: "Due to concerns about short-sightedness in business decisions and unethical treatment of animals, P&G will no longer give any quarterly guidance, will not attempt to make any arbitrary time periods appear profitable, will seek to realize actual profits over 3-5 year periods rather than 1 year periods, and will immediately cease to house, use, or cause to be used any animals in the testing of its products."

P&G shareholders could either vote for a board change, or suck on it. Of course they could try to sue. They could also try to sue the board for not wearing paisley neckties every Tuesday. Both cases would have as much merit.

Re:As a matter of fact, you can

[bberens]

The Board is required to fulfill the company's purpose as laid out in the corporate charter. That may or may not be maximizing profits.

Re:As a matter of fact, you can

[Americano]

As a company, If the company isn't returning as much profit as possible THAT QUARTER, you aren't fulfilling the obligations to the shareholder.

Not true, at least not as stated. There's no obligation to provide "maximum profit" in a specific quarter, or in every quarter.

Corporations can, and often do, take a longer view of profitability, and focus on making wise investments (expenditures!) today that will enhance their profitability later through increased capacity, a better market position, acquisition of a key strategic component, etc.

Corporations that are solely concerned with the current quarter are foolishly shortsighted - so much so that I think you could probably make a good case for that sort of governance being a breach of fiduciary obligations to shareholders.

Re:As a matter of fact, you can

[Americano]

As he wrote it, he's probably quite correct - I think it's probably quite likely that no corporate charter has listed its sole business goal as "making truckloads of cash."

Re:As a matter of fact, you can

[Americano]

And when the company you just forced into bankruptcy leaves a bunch of creditors (you included, and probably numerous other companies you've invested in separately) with pennies on the dollar, you don't think this will be a concern?

Recovering your investment is rarely as simple or black and white as you seem to want it to be - it's often simpler and less disruptive to just sell your shares and take the deduction from the loss to offset some of your capital gains and reduce your tax bill.

Re:What are "Christian business principles", exact

[MaWeiTao]

It's not "liberal" when an individual or corporation decides to do these things. It's considered "liberal" when the government forces individuals to do these things, or extracts money from individuals and corporations in order to do these things themselves.

Many conservatives participate in a lot of charity, I'm not sure why you consider those two things to be mutually exclusive.

Bible.com?

[edremy]

I admit to finding it amusing that it's a .com address. Shouldn't it be a .org at least? You could make the claim for .edu, perhaps. A lot of political candidates would claim it should be .gov, and reading a bunch of the passages I might even accept .mil, but .com?

What next- bible.biz?

Re:What are "Christian business principles", exact

[operagost]

Admit it: if they dispensed ketchup into paper cups (how would that go over in the drive-thru, BTW), you would complain that they're cutting down old-growth forests. The fact that you are spewing your pedantic drivel over the internet tells me that you probably make compromises in your own life in order to participate in civilization.

I haven't seen a styrofoam cup there, but then I've never bought any hot beverage.

Re:What are "Christian business principles", exact

[gravis777]

Obviously, you did not get your BBA / MBA from a strict Christian University, and there are quite a few of those around. They teach that its not a sin to make money, what you focus on is conducting your business in a fair and ethical way, and don't engage in practices that hinder your faith.

In this summery, however, the problem is that the investor is 1) ignorant of what he is investing in, 2) obviously doesn't share their views, and, probably most importantly, 3) is trying to find a way to make money off of something that places like http://www.biblegateway.com/ http://www.e-sword.net/ and others, give away for free. I mean, let's face it, Bible.com isn't exactly a Microsoft, no matter how badly the investor wants to think it is.