Audible.com's Investors Flee
Audible.com released info today detailing gigantic investments in long-term growth. Short term earnings will obviously fall--the stock crashed 30% b/c of the news...Audible provides audio books and other digital entertainment for portable devices including the red-hot iPod.
Byrne's Marketview argued that "those estimates were reduced because they're going to, well, spend money. To make money. You know, like any startup." True, true--today's investors are only concerned with the here and now. The buy and hold investors are almost an extinct species, it would seem to this young author. Here is a note from
Forbesthe online content provider announced plans to significantly increase investments in 2005. "Management's strategic decision to double-down--investing in new businesses such as wireless and education--should eliminate the hoped-for margin ramp in 2005," said Adams Harkness. "While revenue guidance is higher than the consensus, these investments wreck earnings and, in our opinion, the stock." Audible plans to launch operations in the U.K., at a cost of $2 million in 2005, open an education business and deliver content via wireless networks. The research firm slashed 2005 and 2006 earnings-per-share estimates to 8 cents and 30 cents from 40 cents and 65 cents, respectively. "Separately, we cannot disagree with the wisdom of any of these investments. However, in combination, they serve to wipe out the anticipated margin improvement in 2005, lead to year-over-year earnings declines and destroy investor confidence," it said. "We believe it will take several quarters to rebuild investor confidence and therefore are moving to the sidelines."
<< Home