Use access key #2 to skip to page content.

gnulaw (52.16)

Scott Kauffman "SourceForge's (LNUX) Three Guiding Principles: Speak Openly, Take Risks, and Don't Look Back" #4 - Don't Provide Guidance



August 01, 2009 – Comments (4) | RELATED TICKERS: BBY , GKNT.DL , IBM

SourceForge Reports Q2 Ending June 30th Numbers, eCommerce Gross Margins Decrease from 23% to 17%.

A Recap of their Financial Results Conference Call held at 5:00 PM July 30, 2009.

Patty Morris (CFO): "...Adjusted EBITDA loss Q2 $1.2M, media revenue Q2 $4.3 M decrease of 13% same period last year, 56% decrease YoY with media advertising, YoY premium advertising revenue increased 300% to $1.6M...Media revenue increased 15% Q2 v Q1 2009. Premium revenue grew by 56%...eCommerce revenue for Q2 increased 10% YoY (7.4M v $6.8M). eCommerce gross margin for Q2 down to 17% from 23% YoY. Ad network revenue decreased 21% YoY. Q3 sales and marketing expense will increase by $1.5-$1.7M..."

[15:13] Scott Kauffman (CEO)..."[SourceForge's] three guiding principles...Speak Openly, Take Risks, 
and don't look back..."

[21:00] - Eva Braun Morris  "Let's get to conversations, Operators! Open the lines!". 

[30:25] Doug Whitman*, Whitman Capital (Analyst) "...sensitive question...since you guys did a lot of buyback last quarter and you're keeping the window open can you give us some reasons why you're not giving any level of guidance and any indication of revenue direction? I assume you're going to reopen your [guidance] window again. 

[A:] Scott Kauffman ala Porky Pig (as in fumbling for words):"...EBITDA EBITDA EBITDA..this may be my own naivete...I'm not saying we'll never get back...I think my newness in the job...I think  we're sitting on a truly unique set of assets that defy a literal description..."

Comment: Given Scott Kauffman was carte blanche provided 2.5 million shares which were not tied to performance and declared that one of SourceForge's Guiding Principles is taking risk, one must question what exactly is Scott Kauffman risking? He seems to have transferred the risk from himself and Eva to all non-insider shareholders and the last few existing Securities Analysts still following SourceForge. This explains why Scott Kauffman and SourceForge's CFO have avoided attending Analyst Meetings and Technology Conferences, the most fundamental Shareholder Value strategy a responsible and non-naive CEO would implement, again, as a given.

[32:56] Whitman*: What's a reasonable timeframe if the company isn't humping along and doing greaat...that we start alternatives to increase shareholder value? 



Source:VCALL Q2 ending June 30  Conference Call 


* Well done Doug. 

4 Comments – Post Your Own

#1) On August 01, 2009 at 11:55 PM, ikkyu2 (98.09) wrote:

Sourceforge is a neat thing, but it's not a business model.  I feel sorry for the shareholders.

Report this comment
#2) On August 02, 2009 at 1:00 AM, gnulaw (52.16) wrote:

See "Who is Scott Kauffman?"

Report this comment
#3) On August 02, 2009 at 10:14 AM, gnulaw (52.16) wrote:

The momentum is there at SourceForge and Kauffman (Sobel?)  has made some strategically correct decisions but this Earnings conference call exposed additional smoking guns and confirmed Scott Kauffman is not the person to create [fully realizable/fair] shareholder value for non-insider shareholders. This was unequivocally confirmed on this conference all and in his own words. All things equal, SourceForge will continue to elude the confidence of "The Street". One obvious strategy SourceForge should be pursuing is performing an IPO for ThinkGeek.  This would finally and rightfully establish, at least, ThinkGeeks' fair market cap. Two strikes against Kauffman, not providing guidance (incl. not attending analyst meetings/technology investment conferences) and not taking ThinkGeek public.

Report this comment
#4) On August 31, 2009 at 9:16 PM, gnulaw (52.16) wrote:

...and this is why Jon Sobel departed 30 August 2009...

Report this comment

Featured Broker Partners