2HRS2GO: It's mail call
Time to hit the mailbag for the last few weeks:
I thought the article comparing Toys 'R Us and eToys was incomplete.
While I was pleased to see that you recognized the importance of revenue, I think your headline proclaims a victory that has yet to have happened. What is perhaps more remarkable is that a company (i.e., eToys) that has been in existence for so short a period, does not have storefronts, and millions in past advertising can do so well against its older competitor. Moreover, second best in unique visitors does not mean second best in revenues, profits, or rates of growth.
In any event, I wish writers such as yourself would offer a more complete analysis of the facts -- with perhaps some evaluations from Wall Street analysts -- before writing "conclusive" stories.
Jean-Marc F. Blanchard
The piece steers clear of proclaiming any complete wins; as the headline notes, I believe the traffic report "offers hope" for bricks-and-mortar. That's a far cry from asserting a "conclusive victory", to use your words.
I have nothing against eToys; as I said in the piece, that company is doing everything right. But I found the latest Media Metrix numbers interesting because Toysrus.com has been the target of massive criticism over the last several months. For that matter, proponents of "pure" e-tailers have been proclaiming the end of physical retailing for years.
The Toysrus.com piece simply notes that those death reports have been exaggerated. The column never proclaims a win; it says bricks-and-mortar retailers haven't necessarily lost. I trust you see the difference.
As far as getting insight from Wall Street analysts -- most of whom have their own agendas, mind you -- I talk to them on a regular basis,and quote them frequently. If you want their complete opinions, brokerage firms will be happy to sell you research reports.
Ultimately, the freely available 2HRS2GO column is about one person's viewpoint, namely mine. Were I writing a hard news story or an academic analysis, the approach would be different. But this is news commentary, the equivalent of an op-ed piece in a newspaper. No doubt you can appreciate the difference there as well.
Frankly, I don't know what led you to this (IDT) story but I must say was surprised to see it in your column with the slant it had.
I have been an investor for three years in IDTC, know the company well, etc. The company was caught off guard with the shareholder comments and was I believe shocked that investors would act so unprofessionally in a public conference call with analysts attending. In my view it is more than possible that people who short the stock were in reality asking the questions and trying to irritate management on purpose. Indeed, that may have then brought the story to your attn. Note, the company has a large short following who often plant stories with folks like Herb Greenberg, etc.
I post regularly on the Yahoo, Silicon Investor and ragingbull.com boards. A review of the posts on these boards (regarding last week's annual meeting) will show you a more accurate picture of the company. You will see probably 50 posts from shareholders who attended the annual meeting (the day after the conference call), and to a person were singularly impressed with both management and everything they are doing at IDTC. The quarterly conference call is an opportunity for the company to strut its stuff and for analysts to ask questions. The annual meeting is where investors are asked to frankly air any questions and get direct answers from (CEO Howard) Jonas himself.
I urge you to review the posts I mentioned and if you feel appropriate. Print an article more accurately portraying the real investor sentiment for this company.
John England
IDT should be very happy to have you as a shareholder.
I reviewed most of the posts that you aggregated, and it's safe to say they were generally positive. But -- I don't mean to be overly cynical here, although that's a hazard of my job -- I've covered and listened to annual meetings conducted by more than a few companies, and I can say with certainty that they're normally packed with one particular class of investor: longs.
Just as short-sellers have their own agenda, so do their long counterparts; often, the softball questions asked at annual meetings come from people interested in feeding their board questions that will polish the company's image. It's as manipulative as anything the shorts do and provides as inaccurate of a picture.
Earnings conference calls tend to paint a more rounded view, because that's when the company talks about hard numbers and future expectations. The quarterly calls aren't the orchestrated feel-good revival meetings that annual meetings tend to be.
I listen to conference calls constantly and I have rarely, if ever, heard the kind of tension that I heard on IDT's call last week. As you correctly noted, that kind of unusual action is what prompted me to write an article.
The head of a publicly-traded company should have patience with the public. Shareholders put their money into the company, so I'd say that gives them the right to complain within reason. As far as I can tell, asking management to justify itself is well within reason; it's not like anyone on the conference call leveled personal threats or insults.
My concern was with management's attitude toward individual shareholders, who happen to make up the vast majority of ZDII's audience. If I'm a retail stockholder, and I hear the management of my company describe me as not being "the right kind of people" -- and that was a statement made in all seriousness, not in jest -- I'd have to ask myself: "Why would I want to own a piece of a company whose board thinks I'm not the right kind of shareholder? Why invest in something that thinks it's too good for me?"
You suspect shorts were the ones peppering management during the earnings call. Were they all shorts asking questions on that call? I don't think so -- at least some of the questioners on the conference call identified themselves as long-time shareholders, and IDT executives seemed familiar with them as such.
You note that many shorts target IDT. Shorts target companies they think are due for a fall. Sometimes they're wrong, but many times they're also right. Were I an IDT shareholder, I'd be wondering why shorts are so keen on my company. Maybe they see something vulnerable.
There are plenty of good investment options out there, and not all of them are so contemptuous toward the retail investor. Even the jokes and offhand remarks are dismissive, e.g., the LBO crack at the conference call or the "I wish they would sell" remark quoted in some of the annual meeting reports you referred me to.
The most galling part is that IDT doesn't have the clout to be hoity-toity. This is a company whose record of meeting analyst estimates is mixed. This is a company whose stock languished until it created an Internet play with Net2Phone, an Internet play that not even IDT management, by its own admission, has figured out how to make money from. IDT talks a big game, but it hasn't delivered on yet.
That doesn't mean it won't deliver. Still, until it does, humility would better serve company executives.
Preaching against arrogance sounds hypocritical coming from pundit who thinks his opinions are worth foisting upon the public. But just because the pot is black doesn't mean the kettle isn't.
And finally, perhaps our most representative piece of mail (with many other stocks substituted for Pixar, depending on the writers' holdings)...
you're a fool and PIXAR is helping me get rich.
alphadork
I'm happy to hear that your PIXR investment is working out for you. You'll be glad to know that I concur with you: I am most certainly a fool, and a fool happy to know that you took the time to comment on one of his pieces.
Regards,
Sergio Non
Other issues:
Besides, Red Hat would be crazy to pay Be's current market cap (let alone a premium to it) just to add some multimedia capabilities. Apparently today's market agrees, judging by today's profit-taking after yesterday's Be run-up.
Analysts seem to agree with the company's contention that its software is becoming popular for e-business. Deutsche Banc Alex.Brown upgraded the stock to "buy" from "market perform" and Banc of America Securities reiterated a "buy" on the stock. Yesterday Legg Mason Wood Walker reiterated a "market outperform" rating. 22GO>