+1 Nussbum! Penron is a succinct statement.

Now for a little truth intervention...

In "the company's efforts to remake itself from a 'smokestack industry' publisher into an Internet player..."

Penron acquired Stardust at $5M (yes MILLION), Streaming Media at $65M (Yes MILLION), Duke at $150M, PTS at $ 17M, Internet World at god knows what, and well we all know where that went. Invested more millions in vaporware companies like Cayenta. This is just a sampling of the "remaking."

Yet, even in Q3 2006, at the end of the long road, the smokestack provided the lion's share of the revenue and growth. After all, it has always been roughly a 3-6% margin game, even in down times. Those margins are not really bad for any business of this size. Without the remaking, it should have been a sustainable business, could have been married to a solid online strategy, and would have produced respectable returns for shareholders.

For all of the mutual admiration love-in surrounding e-media and the vacuous continued i-e-crazed-buzz-terms, internet is still the chump change and did not manage to rescue the dead horse no matter how hard it had been kicked in the head.

So what of the masterminds behind the debacle? ex-CEO #1 continued to make (5M/yr. + bonuses?) for THE ENSUING 5 years after the "bubble" burst. How much did the king AND HIS ENTIRE COURT cost us lowly shareholders? How many were laid off during that time? Several hundred. More than half of the company's employees disappeared.

Enter former court member, anointed, now soon-to-be ex-CEO #2. Motivation - a $10 MILLION bonus tied to selling out the very mistakes this same soon-to-be ex-CEO #2 helped make in the first place (a large portion of the total debt too). Task - get ABRY the money back (even better is it's the speculated $150M not the original investment or even a modest profit). Exit plan - grab the $10M bonus and hope the retirement fund isn't chopped because then the Feds tend to show up and question less loyal ex-execs. Can you blame him? If you can't be a success, then cash is surrogate.

$10M!#? Stand back - charging the paddles!!! It's easy to make it "look like a pretty terrific job of resuscitating" when your #1 goal is to continue the pyramid scheme. Hey, JUST like Enron.

P.S. Rumor has it ex-CEO #1 represents a party interested in an acquisition. I wonder who they would put on the board? Maybe even CEO.
Not 2 Be | 07.21.06 - 9:09 pm | #

I stand by what I said. Back when the company was buying all those "vaporware" companies, Penton's stock grew in value to the mid-$30 range. Many of us bought in, supporting the changes.

Yes, many of the acquisitions didn't work out--especially the streaming media buy. But around that time, my company had a newsletter serving the streaming media market, and we sure thought that market looked good (it didn't, the newsletter is long gone, and our losses weren't that bad, but they sure were losses).

You're absolutely right that Penton's smokestack industry pubs are doing well, and you're right that a lot of people got hurt--employees, shareholders. But you're wrong that this is an Enron thing. The strategy made sense at the time, and it didn't pan out--the same happened to hundreds of other companies. In fact, recall that companies that weren't jumping onto the bleeding edge of Internet investment were devalued heavily by shareholders.

I guess you should have sold your stock in the first quarter of 2001--the quarter when the overall market began its long slide (exacerbated, but not started, by 9-11).

But since you evidently didn't, and neither did I, we're stuck with what we now know was a bad investment. But we weren't lied to or conned into making that investment.
David Shaw | Homepage | 07.24.06 - 9:12 am | #