ATRN / Kazaa Update – Time to Buy Again
Thank you Atrinsic Board of Directors – yesterday we believe that the BOD granted us the most important item on our March 27, 2011 “BOD Wish List” in addition to securing a financing deal that not only provides a signal to us that management was unwilling to sell stock at the current price but it also allows management to focus on growing the business instead of day to day cash flow issues. The bigger news of the day was the hiring of Mr. Stuart Goldfarb, who in our opinion fully satisfies #3 on our list where we asked for a “rock star” CEO “with significant music industry and/or subscription business model experience”. Mr. Goldfarb’s experience in transitioning the BMG Music Club, Columbia House and other subscription driven pre-digital music legacy models into billion dollar revenue online businesses makes him the ideal candidate (in our opinion) to lead the re-emergence of the Kazaa brand.
Mr. Goldfarb’s first act as CEO on his first day was to bring in an industry veteran to serve as Chief Marketing Officer. This speaks volumes to where his focus lies and we could not be more pleased. One of the more unsettling things about being an ATRN shareholder the last few months has been that they have a very competitive and in some ways superior service offering (Kazaa) in a really hot space, but it did not seem that it was being marketed very aggressively. This combined with the lack of transparency, 11th hour SEC filings, lack of shareholder communication and obvious need for additional financing that could have caused much worse dilution led many shareholders (and many Groove community participants) to sell their shares.
Hopefully many of you took advantage of yesterday’s big Nasdaq sell off to start rebuilding your positions in ATRN, which barely moved despite releasing news that addressed the biggest issues that led to ATRN’s strikingly low valuation. Obviously, execution will be the key going forward and success will be measured by the numbers, but yesterday’s news was a major leap forward in regaining our confidence and we believe that investors who buy ATRN shares at today’s prices will see significant gains over the next few quarters.
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