When I was at Financial World Magazine, we would do a list of the ten worst managed companies in America. The cycle was about once a year. To make the list, a company had to do a lot wrong compared to the rest of the stock market and its peer group. The financial results would have to be very poor, and companies in industries that were down across the board were usually not included. For this tech list, a number of financial sources were consulted along with research from Wall Street and sources like ValueLine, Morningstar, Investor's Business Daily and Yahoo!Finance.
Loudeye Corp (LOUD) which supplies digital media solutions and outsourcing for companies looking to maximize their return on their digital media investments has been through multiple CEOs and business models over the last six years. In its latest incarnation, the company offers global digital media supply chain management for content owners across the music, film/video, game and software industries. Since their earlier business models didn't work, maybe this one has a chance. Loudeye hopes so, because their auditors have indicated that might be running low on money by giving them a "qualified opinion".
Wall Street is betting against a Loudeye turnaround: After trading above $2.50 in late 2004, the stock ran down to $.35 and now trades at $.51. The company's revenues have gone up over the last three years, but expenses have gone up more. Loudeye has shown an operating loss in each of these years with the largest one being a hole of $26.3 million in 2005.
Loudeye's revenue growth may be disappearing. The company guided for revenue in Q1 of $7.5 to $8 million, which would be below the Q4 or number of $8.8 million.
The chances that Loudeye makes it as an independent company seem fairly low now, so the question may be what it will fetch in a sale. The board and management were simply never able, after multiple attempts, to find a digital media model that would make money.
LOUD 2-yr Chart
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also president of Switchboard.com when it was the 10th most visited website in the world, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. McIntyre can be reached at firstname.lastname@example.org.