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gnulaw (56.62)

SourceForge CEO Kauffman's "ADS" Strategy ADdS Up To Zero, Losses Mount, Key Exec Leaves

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September 03, 2009 – Comments (6) | RELATED TICKERS: BBY , GKNT , IBM

SourceForge has reported losses of $11.0M for the six months ended June 30 2009 or (.18/sh) compared to $4.7M (.07/sh) for the six months ended June 30 2008 under Scott Kauffman's leadership who was hired December 5th 2008.

SourceForge (NASDAQ:LNUX) closed under its 50-day moving average to $1.24 today with a market cap of $74.87M. With approximately $40 million in cash Kauffman and his management team have managed to establish a value of appx. $35 million for SourceForge.net, ThinkGeek.com, Slashdot.org, and Freshmeat.net combined. (SourceForge's network of web sites serves 35 million unique visitors each month* and includes: SourceForge.net, Slashdot, ThinkGeek, Ohloh.net, fossfor.us and freshmeat.net). ThinkGeek alone is generating appx. $40 million in revenues annually or 67% of total SourceForge revenue. In other words the market is valuing all of SourceForge (less cash) at less than ThinkGeek's annual revenues alone.

And now SourceForge's arguably most substantive management team member announced his departure from the company which is effective September 25th, 2009 or [significantly?] 5 days before the end of SourceForge's Q3 ending September 30th. ThinkGeek's VP and General Manager sold more shares contemporaneous with Sobel's announcement arguably sending a signal to Kauffman and the Board of Directors she is [also] tired of SourceForge Management keeping her option strike price(s) under water i.e. witnessing the destruction of insider shareholder value as well as non-insider shareholder value...and once again, Kauffman's failure to increase shareholder value through a ThinkGeek (NASDAQ:G33K) IPO.

Under Kauffman's leadership there has also significantly been no news, no analyst meetings, no investor conferences, no guidance . What exactly is this management team being paid for and why is the Board of Directors , Directors with controlling positions, and non-insider shareholders tolerating it?

The market continues to confirm Kauffman's ADS strategy ADdS up to nothing. 

SourceForge is a superior CEO/Management team away from being a ten-bagger(.)

 

*Source: Google Analytics, Coremetrics and Omniture, June 2009

6 Comments – Post Your Own

#1) On September 04, 2009 at 11:07 AM, gnulaw (56.62) wrote:

[CORRECTION]

>>With approximately $40 million in cash Kauffman and his management team have managed to establish a value of appx. $35 million for SourceForge.net,  ThinkGeek.com ,  Slashdot.org,  Freshmeat.net [and ohloh.net] combined.

> ThinkGeek alone is generating appx. $40 million in revenues annually or 67% of total SourceForge revenue.

For the second quarter, SourceForge also reports:

E-commerce revenue as a percent of total revenue rose to 63.2% from 57.5% a year ago. Source:

 

 

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#2) On September 04, 2009 at 1:44 PM, chk999 (99.98) wrote:

I never actually understood why SourceForge made sense as a publically traded company. This always looked like an "and then what" type of company.

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#3) On September 04, 2009 at 8:15 PM, gnulaw (56.62) wrote:

Someone was hitting LNUX's ASK hard today.

What do they know and when did they know it?

All things equal with all public information available who would be banging the ASK?  

Speculation only...it would not be good if it was SourceForge invoking its Board approved share buyback initiative in reaction to analysis e.g.  this one which was picked up by Google Finance.  Creating shareholder value or conversely preventing further shareholder value destruction through share buybacks at this price, and again, pursuant to all said publicly disclosed information as of 3 September 2009 would be alleged gross negligence at a minimum and sufficient grounds to dismiss  Kauffman, Morris, and Seirmarco for cause. This must be followed closely...to be continued.

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#4) On September 05, 2009 at 10:05 AM, gnulaw (56.62) wrote:

>Someone was hitting LNUX's ASK hard today.

To put this comment into perspective, it should be noted, and of particular and arguably [legal] significance, that the BID x ASK was 1.24 x 1.25 and someone was coming in with 6k, 10k Block trades at $1.35 per FreeRealTime.com Time & Sales history for LNUX on September 4th 2009.

 

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#5) On September 06, 2009 at 11:15 AM, gnulaw (56.62) wrote:

Should LNUX be a Takeover candidate?

>>With approximately $40 million in cash Kauffman and his management team have managed to establish a value of appx. $35 million for SourceForge.net,  ThinkGeek.com ,  Slashdot.org,  Freshmeat.net [and ohloh.net] combined.

 i.e. The company currently has a market cap of 76.68 million as of Friday's close, or ~1.21 times sales. When you back out cash the market [as proximate cause of Scott Kauffman and his management team] is currently valuing SourceForge at ~$37 million for a business generating > $60 million in revenues that is serving 35 million unique visitors per month.

It is important to remember that the objective here [always] is to maximize [insider and non-insider] shareholder value as efficiently and effectively as possible. It is essential that the right team implement this and not further squander SourceForge's cash while sustaining increasing losses in addition to the possiblility of sustaining shareholder lawsuit(s) for alleged gross negligence. The current CEO has no incentive and is risking nothing pursuant to Robert M Neumeister's alleged negligent 2,250,000 share option [given] to Kauffman (not based on performance).

No risk + no passion has never been a successful business model. Board Director Suzanne Present and the more rational LNUX Directors need to make this happen which also should be contemporaneous with a (NASDAQ:G33K) IPO.

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#6) On September 10, 2009 at 7:46 PM, gnulaw (56.62) wrote:

"ADS" Strategy:

Awareness - Scott Kauffman will be reporting progress on this goal on the next earnings call, historically around October 29th after the closing bell. Trick or Treat?

Data 

Sites -->  ratings, review, tagging --> engagement, monetization*

 

Source: July 30, 2009 six months ending June 30 2009 Earnings Conference Call 

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