Seeking Alpha
Dan Rayburn, StreamingMedia (156 clicks)
Research analyst, streaming and online video
Profile| Send Message| ()  

For shareholders in any company, these days are trying times. I don't have to tell you that all stocks are down and the market has taken a beating. That being said, even when the market was doing better, I still got more hate mail from Akamai (AKAM) and On2 (ONT) shareholders than any others, most of which are for emotional reasons as opposed to rational arguments.

Most of the mail comes from individual investors and not large firms and the person typically wants to argue over a post I made on my blog, without either reading what I actually wrote, or not wanting to admit things that are simply facts. And while I am the first to admit that I don't own stock in any public company and have never bought or sold a single share ever, even I know that investing in any company means you have to keep your emotions out of the decision making process.

In my blog post last week about Sun (JAVA) launching the new JavaFX platform, I got tons of e-mails from readers who said I was crazy not to realize how big of a deal JavaFX is and how it would take over video playback on all devices. When asked, most of those who sent me the e-mails said they were investors in On2.

While I can understand how an investor in On2 would be excited for the JavaFX announcement since Sun licensed the On2 codecs, you still have to keep the deal in perspective. Sun is not going to make any major traction in the market anytime in the next year. What it released last week was version 1.0 with very limited functionality for video and it doesn't even expect to have development software available for mobile until half way through 2009. Developers have to build apps first, get content owners to use them, get them deployed and get viewers to start to consume them. This does not happen overnight, or even in twelve months. Yet, many of those On2 investors who sent me e-mail wanted to argue with me that I don't know anything about investing and that I must be working for Adobe (ADBE) or have an interest in seeing H.264 succeed.

I don't need to know anything about investing to know how long it takes for something to be adopted in the market. How quickly do you really think it will take Sun to grab any large share of the market away from Adobe? That will not happen anytime soon and that's reality, like it or not.

And while it is very easy to dismiss my post by saying, "Dan must work for Adobe", that's a lame argument. Whenever I write a post that is considered positive about Adobe, people say I must be working for them. If I write something positive about Microsoft (MSFT), some are quick to say I must work for them. Rather than some investors wanting to actually admit that they are allowing their emotions to cloud their judgment about how a company is really doing, it's easier for them to come up with a lame and false statement that the author must be getting paid by someone to write something that is positive one way or another.

If I were an On2 investor, I would look to the past. When Adobe licensed the On2 codec for Flash, many On2 investors wanted to make crazy statements about how big of a deal that would be for On2 and the revenue that would come from it. Considering how much Flash video is on the net and the rate at which Flash video was adopted, is any On2 investor happy with the deal Adobe got? I'd doubt it. On2 has made very little from the Adobe deal, but that is not stopping some from saying the Sun deal will be completely different. Can Sun get as much adoption as Flash has? No way.

I'm not knocking On2 as a company or its investors. Hell, I would not want to be an investor in any company with the way the market operates and the kind of headache it must cause for those who own shares. But at the same time, you have to remove your emotions out of the picture so you can make informed decisions based on data, logic and what is really taking place in the market.

Aside from lots of e-mails from individual On2 shareholders, I also get a lot, if not more e-mails from Akamai shareholders. Many of them want to argue over points that make me wonder if they just want to argue for the sake of arguing?

When I wrote the post last week on Akamai and how the company was cutting pricing, I got lots of e-mails where people wanted to argue with me on lots of aspects of its business. That being said, not a single person was or could argue that Akamai is not growing revenue as fast as it used to, is seeing pricing pressure in the market, has seen a slowdown of traffic growth on its network and had to layoff 110 employees. Instead, folks wrote in with lots of angry e-mails about how Akamai is going to crush Limelight (LLNW) in the patent case and how Limelight is building a business on stolen technology.

For starters, the post didn't have anything to do with the patent case and I've never said that I think Limelight will win the patent case. In fact, I don't see why the judge would reverse the ruling and I think at some point, Limelight would have to pay some kind of damages, but it is really the rate that will be debated. But even if that happens, why would Akamai investors care so much about it?

Let's say Limelight has to pay $50 million in damages and shows that they are no longer infringing on the patent. Now what happens? Nothing major. Akamai gets $50 million dollars, which does not put them in any kind of new revenue bracket and Limelight now only has $127 million in the bank instead of $177. It does not put Limelight out of business and if customers have not left Limelight over the past two years during the lawsuit, what makes you think they would leave down the road after a Limelight payment? It's an emotional win for Akamai shareholders, but it has no real impact on how Akamai is going to get back to growing its business.

But the best thing I always get from many individual Akamai shareholders is that I must be working for Limelight or trying to "pump" the company's stock. Again, what an easy argument for them to make, except for the fact it's not true. When I write something positive about Level 3 (LVLT), people write in and say I must be working for them. When I write something positive about Limelight, they must be paying me.

And when I did two posts about Akamai's application delivery product, some said the company probably paid me to write that. By all accounts, apparently I work for just about every CDN company in the market. Too bad they are all wrong and that I have never been paid by any CDN ever, except for Mirror Image which I stopped working for over a year ago and have never written about them on the blog.

If investors want to debate, great, let's have a discussion on how or why one company is going to grow over another. The comments section is always open on my posts. But bringing emotions into the picture and wanting one company to do well over another just because you have stock in them is not the reasoning behind why they must do well in the short or long term.

Source: For Many Akamai and On2 Investors, Emotions Clouding Their Judgement