[UPDATE1] Efficient Market Hypothesis and the Implications of Non-disclosure
Efficient Market Hypothesis (EMH).
"...In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". The weak version of EMH suppose that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information. The semi-strong version supposes that prices reflect all publicly available information and instantly change to reflect new information...." What happens when a company withholds material information? Disclosure simply normalizes inefficiencies esp with microcaps/smallcaps. Conversely, non-disclosure of material information can be a precusor/incubator for insider trading including accumulation of shares to gain a controlling position.
By definition, how can microcap Geeknet (LNUX)s current stock price fully reflect all past publicly available information when it has not [fully] disclosed all said information. It accordingly appears that Geeknet (LNUX) Officers, Directors, and controlling shareholders are allegedly [potentially] exposing themselves to alleged violations of Section 406 of the Sarbanes-Oxley Act of 2002, SEC Rule 10b-5 in re: reliance, causation, omissions, selective disclosure and related State and Federal Securities laws. So, what exactly is The Blueshirt Group doing for Geeknet (LNUX)? I have never witnessed a Company with virtually [no] investor relations whatsoever. None. So the question one must ask, and especially a question any non-insider shareholder must ask is, Why?
In addition to the legal implications of this allegedly dangerous, wreckless, and negligent course of action Kauffman is conspicuously avoiding selling this Company to its own shareholders and potential/future geek consumers/shareholders, Wall Street Analysts, Market Makers, et al.
Douglas Whitman: "...the valuation of this company is very low, you've got a major eCommerce business that's doing, you know, obviously very well, um, an eCommerce business is probably worth more than the whole market capitalization not even counting the rest of the Company and the cash, um, could you talk a little bit about what the plans are on, uh, away from the press thing, to go back to Wall Street and reestablish a presence on Wall Street?..." Source: Douglas Whitman, Whitman Capital, [13:56] into the Questions and Answers portion of the February 11th Conference Call.
Scott Kauffman: "...It's certainly in the cards, We're very focused on the business, and it'll be a mix of how I allocate my time..."
With all due respect, the problem, Scott's flawed premise/mindset is that the business and maximizing shareholder value are not mutually exclusive. This is a publicly-held company. Scott Kauffman has not embraced this fact yet, of which, is actionable at this point, and why Item 9B was architected?
[13:53] "...In closing we're seeing early signs of success from our investments. In 2010 we'll continue to speak openly and take risks. We'll continue to invest and when those investments don't deliver as expected we'll move on but when they work we'll double and triple down to drive this business forward...". Source: Scott Kauffman, Q4 Conference Call, February 11, 2010.
So, why isn't this same mindset "doubling and tripling down" with full disclosures of Geeknet's substantive successes*?... if not simply to keep Geeknet's incremental successes in front of the street. Also one [never] knows when/who will take notice e.g. (Best Buy:BBY), (Amazon:AMZN). Timing is [everything]. Why is Kauffman appealing to geeks as customers and selling LNUX's 40+ million unique views/month to Madison Avenue but is shutting out geeks (and everyone else) as shareholders? No investor relations/non-disclosure is simply a preemptive strike at maximizing shareholder value [destruction].
Artis Capital Management acquired 804,009 Geeknet (LNUX) shares as reported by Morningstar for the quarter ending 12/31/2009 [Institutions Tab]. Why is this significant? The only substantive news Q4 was Geeknets reporting November 4th of their Q3 numbers ending September 30, 2010.
As a result of Scott Kauffman's naive and negligent strategy of avoiding "The Street" and non-insider shareholders he has additionally exposed LNUX shareholder value to events like this:
ZDNet Deals A Body Blow To Geeknet (LNUX), SourceForge, and effectively Ohloh:
"Google Code is more Powerful than SourceForge
"...Examples like this now make Google Code more powerful than Sourceforge, in my opinion. If you’re an ambitious programmer, you want to be working where your work might be seen by people who can do you some good. Google Code has become off-Broadway. Sourceforge is Philadelphia..." Source: ZDNet March 18, 2010.
Have Unique Visitor Numbers Peaked?
Geeknet's statement in its press release announcing its 2009 [Q4] Conference Call:
Geeknet, Inc. (NASDAQ: LNUX), is the online network for the global geek community. Our sites include SourceForge, Slashdot, ThinkGeek, Ohloh and freshmeat. We serve an audience of more than 40 million users* each month and provide the tech obsessed with content, culture, connections, commerce, and all the things that geeks crave. Want to learn more? Check out geek.net.
(*October 2009 Unique Visitors 42M. Source: Google Analytics and Omniture)...."
is using stats from October 2009 pursuant to said January 25, 2010 Press Release for its unique visits. What are current stats...from Nov 2009, Dec 2009, Jan 2010, Feb 2010?...
[UPDATE] Note: Geeknet is still (as of March 26, 2010) quoting October 2009 Google Analytics numbers for their 40+ million unique monthly visitors (above link is for SourceForge.net numbers). Latest stats from Geeknet (LNUX) SEC FORM 10-K:
•SourceForge provides the Open Source community with a peer production platform to develop, host and distribute Open Source software worldwide. As of December 31, 2009, SourceForge hosted more than 208,000 Open Source projects and had 2.4 million registered users. The majority of our traffic originates from countries outside the United States. SourceForge served 31.7 million unique visitors in December 2009. (33 million, October numbers)
•Slashdot serves technology professionals and technology enthusiasts with timely, peer-produced and peer-moderated technology news and discussion. Slashdot’s lively and robust on-line conversations and interactions leverage its innovative comment and moderation system. Slashdot served 3.8 million unique visitors in December 2009. (4 million, October)
•Ohloh is one of the largest, most accurate and up-to-date software directories available on the web. Ohloh served 1.4 million unique visitors in December 2009. (1.6 million, October)
•Freshmeat indexes downloadable Linux, Unix and cross-platform software for a worldwide IT audience. Freshmeat served 0.6 million unique visitors in December 2009. (1 million, October)Source: 2009 SEC FORM 10-K.
Again, the question one must ask, and especially a question any non-insider shareholder should be asking is, why isn't Geeknet (LNUX) [fully] disclosing said "new information" and arguably one the SEC should be asking viz-a viz Geeknet Directors Present, Sileck, and Bowman, not to mention Item 9B, pursuant Geeknet (LNUX) s recently filed SEC Form 10-K for the year ending December 31, 2009.
Q4 2010 turnaround, Zacks' Strong Buy, ThinkGeek's 42% increase in eCommerce revenues,
ThinkGeek's Guitar T-Shirt 637,001 YouTube views,
The Twitter 2010 Shorty Awards held March 3rd, Category: Customer Service, ThinkGeek, Finalist and 1st runner-up, behind Comcast (Winner) and ahead of F-1 Team McClaren.
Popular Mechanics names ThinkGeek TShirt one of Top 12 Gadgets at 2010 International Toy Fair
ThinkGeek's Rock Academy
ThinkGeek on CBS' Big Bang Theory
Not bad...but no one [full public disclosure] knows. This continuing pattern mindset is why Geeknet (LNUX) shares have flatlined and arguably trade below iiquidation value...and no [full] disclosure re: and T. Priceless and irreversible lost opportunity costs e.g. maximizing ThinkGeek Brand/eCommerce equity and optimizing transparency of said Brand Equity to competitors/suitors e.g. Best Buy, Amazon, et al while normalizing Geeknet (LNUX)s true shareholder value.
/s/chaosUnplugged, Motley Fool #1 Leader, Red Hat (RHT) and Citrix (CTXS) picks.
1. Geeknet (LNUX) - Large Institutional 13D Shareholder Put Pressure On Board Demanding to Unlock Value. Where is Geeknet now 21 Months Later?
1a. Where are we today? (25 months later) LNUX closed at $1.78 on February 15th, 2008. This article was originally published on Monday February 18th. LNUX closed at $1.54 Friday, March 25th, 2010. In other words, LNUX management has incurred 13.48% shareholder value destruction since Trivium made this demand of LNUX Management and its Board of Directors on February 14th, 2008. To put this into perspective think about what has changed in 25 months...See Trivium Capital Management Sends SourceForge a 13D Valentine
2. SourceForge (LNUX) Changes Name and Announces Launch of Geeknet, Negative Earnings Surprise
3. Shareholders vote with their $. Geeknet (LNUX) Downgraded, Shares Sink Further Below Liquidation Value.
4. What/When are the Minds Behind ohloh.net Doing to Turn Geeknet (LNUX)s World Class Open Source Assets Into Something Extraordinary...into a Viral Loop?