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Carbonite shoots its business model in the foot

Carbonite shoots its business model in the foot

The decline in the price of Carbonite stock since it announced it was dropping its longstanding advertising on the Rush Limbaugh show is not the real story of the damage done to Carbonite.

The price of Carbonite stock has been dropping since October for reasons unrelated to this controversy, although it did fall off a small cliff this week.

The real problem for Carbonite and its shareholders is that in leaving behind 15 million Rush listeners, Carbonite has shot its business model in the foot.

Carbonite went public in August 2011.  According to CEO David Friendly, the IPO almost never happened, and was saved at the last minute by institutional investors.  Those investors, it turned out, included the early Venture Capital investors, which some argued were not not fully and timely disclosed:

As the IPO market fell out of bed in August, one company, against all odds, squeaked onto the market.

To get the deal done, online storage company Carbonite not only cut the offer price significantly, but it also sold nearly half of the new shares to existing investors. But these investors didn’t fully disclose their larger ownership stakes for weeks, meaning the level of genuine, external interest in Carbonite’s shares wasn’t nearly as high as some may have thought….

The IPO was saved, a person familiar with the matter says, thanks to a large mutual fund agreeing to buy nearly a quarter of the shares for sale at a 40% discount to the original target price. Even so, the underwriters still needed Carbonite’s venture capitalists—including Menlo Ventures, Crosslink Capital and Institutional Venture Partners—to buy another 44% of the for-sale shares.

Carbonite remains essentially a venture capital investment which never quite cashed out.  Based on this week’s events, it appears the VC investors, not to mention public investors, may never see the payoff.

Carbonite’s business model, as many small IPO’s, depends on the company growing rapidly in terms of revenue and in Carbonite’s case, subscribers.  While retaining current subscribers obviously is important, getting new subscribers is key to the growth model.

In its February 27, 2012 Form 8-K/A Current Report, Carbonite touts its rapid annual the growth in subscriber base and revenue.

But getting new consumer subscribers is difficult and expensive, and getting more so as new competitors — including possibly Google — enter the field.  A key part of getting new subscribers, according to the Prospectus, was through radio personalities.

According to the Prospectus for the August Initial Public Offering, Carbonite depended heavily on radio personality endorsements to grow its customer base (p. 13, emphasis mine):

We generate substantially all of our revenue from the sale of subscriptions to our solutions. In order to grow, we must continue to attract a large number of customers on a cost-effective basis, many of whom have not previously used online backup solutions…. Currently, we rely significantly on advertising endorsements by certain radio personalities. The loss of one or more of these endorsement arrangements or our inability to obtain additional effective endorsements could adversely affect our advertising and customer acquisition efforts and our operating results.

Carbonite reiterates this dependency on radio endorsements in the Form 10-K Annual Report it filed yesterday (h/t commenter Eliot Ness) (p. 12):

Currently, we rely significantly on advertising endorsements by certain radio personalities. The loss of one or more of these endorsement arrangements or our inability to obtain additional effective endorsements could adversely affect our advertising and customer acquisition efforts and our operating results.

While Carbonite does not name which radio endorsers it relies on most, looking at the list of Carbonite’s “trusted spokespersons” it is obvious that Rush was Carbonite’s single most dominant radio presence by far.

Based on rankings by, Rush dominates the other Carbonite “trusted spokespersons” on the top 12 list (Beck, Ingraham, Schultz, Komando) and almost equals the rest collectively:

When Carbonite in its public filings warned of the risk of loss of “one or more of these endorsement arrangements,” what it really must have meant was the risk of loss of Rush’s endorsement.

It gets worse for Carbonite.  In the Prospectus (p.14), Carbonite warned of declines in retention rates.  This makes sense because it is so hard and expensive to gain new customers that Carbonite needs to retain those customers and to increase revenues from existing customers:

If our customer retention rate decreases, we may need to increase the rate at which we add new customers in order to maintain and grow our revenue, which may require us to incur significantly higher advertising and marketing expenses than we currently anticipate, or our revenue may decline. A significant decrease in our customer retention rate would therefore have an adverse effect on our business, financial condition, and operating results.

There has been no public disclosure yet as to how the controversy over dropping Rush affects Carbonite’s new subscriber and retention rates.  It may be a number of weeks before the full effect is felt.  Annectodal evidence from the commenters here and around the internet indicates a backlash.

It is significant that Carbonite not only lost access to Rush’s audience, it angered that audience by deviating from its previous non-political advertising policy and seeming to take sides by continuing to advertise on liberal talk shows where the personal invective is more frequent and more pronounced.

As Investors Business Daily puts it:

In expressing his own opinion about Limbaugh, Friend put Carbonite out front in a way that now has it in a delicate balancing act between forces who endorse and oppose its actions.

If the history of newly issued small capitalization high-growth public offerings is any guide, if Carbonite misses its sales, retention or revenue goals even by a little, the market reaction may make this past week’s decline seem like the good old days.

At that point, VC and public investors will have to ask, did our CEO put his own political leanings ahead of the interest of the shareholders?  And if so, was it worth shooting Carbonite’s business model in the foot?


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stevewhitemd | March 8, 2012 at 9:02 am

Off-site backup is almost a commodity business. Servers are cheap. Infrastructure to support them is cheap. The back-end software and features are well understood.

So trying to make a buck by selling a commodity as a differentiated, leading-edge, “gotta have it” product is going to be a problem.

That’s why they’re floundering. There’s a lot of competition now in the off-site backup business; it’s more and more driven by price. $59 a year? Someone else will do it cheaper and eat their lunch.

    dwellman in reply to stevewhitemd. | March 8, 2012 at 11:23 am

    Commodity, hardware-wise, yes, but the middleware, that’s they key. 99.9% of the population can’t be arsed on the heretofores and what fors of SFTP, rsync, FUSE and the like. To confuse that further, backup is separate from imaging (DriveImageXML for Windows types, Mondo Rescue for GNU / Linux types). Even then, roll your own off-site storage looks about $120 year for 50GB (Softlayer CloudLayer Storage). I’m sure Google Drive (little less ($100) or Amazon Cloud Drive could be made to work, but I’m belaboring the point.

    People just want to click a button or, optimally, not do anything at all. I definitely see a market for many services like Carbonite, Mozy, ect, irrespective of competition, I don’t see us we’ll hit a point of demand elasticity anytime soon. Joe Schmoe consumer is finally getting a small peek of what Veritas or Tivoli have been giving us corporate types for years. Competition will come down to who presents their (non) button pushing the best.

      stevewhitemd in reply to dwellman. | March 8, 2012 at 11:58 am

      Dwellman, I agree there is a market, precisely because 99% of consumers don’t want to think about how to do all this, they just want it done (when they learn why they should in the first place, of course).

      So there’s a price for that. But Carbonite, Mozy, etc are in a race to the bottom because it’s not hard to do this.

      Remember frozen yogurt? Remember TCBY? They put up stores all over the place and for a while it was about the only place you could go for frozen yogurt (and it was good, and they used the 31 flavors model of business).

      Until every 7-11, gas station and fast food restaurant realized that all it took to offer frozen yogurt was a jug of liquid substrate and a machine the size of an orange juice cooler.

      Poof went TCBY.

      Same thing should happen to Starbucks, and has already happened to most of their competitors. What does it take to offer a good cup o’ joe? You don’t need to be Starbucks for that.

      Same thing will happen to Carbonite. There is nothing special about them or about their business model. They’re offering the computer equivalent of frozen yogurt. If they do it really, really well and pretty darned cheap they’ll survive, but expect them to get eaten out from underneath.

        theduchessofkitty in reply to stevewhitemd. | March 8, 2012 at 2:17 pm


        As I said before, the home computer user in particular has no need for Carbonite. You can find external hard drives at on sale – in the terabyte range, to boot. Backing up your drives is nowadays so easy a caveman can do it.

        For the small business user, there are local backup firms that can offer a good backup service at cheaper rates than Carbonite. All you have to do is look at the Yellow Pages online. Or ask other business owners what they do to backup their files.

        Who the heck needs Carbonite, really?

        Rush pretty much propped them up, and he can just as well take them down. That the power of Rush.

        As the Brits like to say, good riddance to bad rubbish.

It’s a special challenge when the backup service is not especially good and customer service is weak.

The backup facility is very heavy handed. My desktop (OK, three years old but not that slow) was effectively unuseable for about 15 minutes after booting while the utility scanned the disk. Same after hibernate. There’s no particular reason why the tool couldn’t have take an approach more inline with “coexist”, as it were.

After a bit more than six months of this frustration (I would not waste electricity to avoid [some] of the sluggishness), I tried to cancel my account. They would not refund any of the subscription fee [no surprise there] but, worse, I would get weekly reminders of no backup [the first few I celebrated the improved availability but it then became wearisome]. It took multiple calls for the customer service people to disable the reminder. (yes, I could have declared the notices spam but I wanted in part to get a message to Carbonite).

And so it turns out my decision to quite Carbonite corelates well with the stock price – I guess a lot of folks grew weary, too.

$5 a year for 20 GByte at Google docs is a must better solution for me.

TheCubanGringo | March 8, 2012 at 9:41 am

FWIW: After receiving many complaints and promises from Carbonite users to take their business elsewhere (including my own), Carbonite has now closed their Facebook page to original customer posts. Although, one can still comment on their own posts.

    Smedley in reply to TheCubanGringo. | March 8, 2012 at 12:28 pm

    Maybe they should get a celebrity endorsement – possibly Hans Solo – as I recall he was encased in Carbonite and came out smelling like a rose, got the girl and a lucrative multi movie deal. That could turn the company around.

Next step: Carbonite will get a bailout from Obama 😉

I’m glad you posted this news. Rush also corrected the record yesterday on the wildly inaccurate number of sponsors pulling ads. This little stunt will backfire big time. If Rush can survive a President blaming him for the Oklahoma bombing I think he can easily survive a radical feminist.

In fact I won’t accept Rush’s apology until Ms. Fluke apologizes for the likely perjury she committed at a Congressional subcommittee hearing.

    Midwest Rhino in reply to iambasic. | March 8, 2012 at 10:37 am

    I corrected a local news guy’s blog assertion that Fluke had testified before Congress. She “testified” before a committee of Democrats, with props to apparently mislead even reporters into thinking it was before (all) Congress.

    But I still don’t know if the stunt was even under oath. She was the sole witness in front of the House Democratic Steering and Policy Committee. She was only there because Issa rejected the stunt of replacing a real expert with the activist Fluke. Democrats had their little script already written, so Pelosi gave her another stage. But I don’t know if “witness” necessarily means they are under oath.

    If so, she has to explain how she has to pay $3000, when the pill is available for $9/month.

    And Fluke’s friend that was a lesbian, but was allegedly refused the pill by the insurer, actually could have had another treatment that WAS covered. And even if she had wanted contraception with her treatment, the pill also was probably available in the case of this disease, if the patient wants the contraceptive option. (or so I’ve read)

    I’m guessing they didn’t put her under oath, knowing the load of bull she was going to spew. They got the optics they wanted, with a little help from their media friends.

      iambasic in reply to Midwest Rhino. | March 8, 2012 at 11:23 am

      You are exactly right. Although she may have not been under oath, one would think, and hope, that a LAW STUDENT would refrain from lying to the public. Of course she really isn’t at Georgetown to be a law student. She is there to be a radical feminist activist.

      We must not let this story go because we need to show how fraudulent the framing of the issue became and how many lies were told by this sanctimonious radical.

        If someone can give evidence that she was lying, when she applies to take the bar (likely very shortly) they can file an ethics complaint with the State Bar for lack of Character & Fitness, which if it is found that she purposefully lied to the public in her statements she will be denied a license until such time as her character is “rehabilitated.”

        If she were to pull a stunt like this and apply to Michigan or Texas for a law license, she would be sunk for at least 2 years (statutory maximum denial for lack of Character & Fitness to practice law). Should either of those Bar Associations do otherwise, there would be a LINE of candidates suing the Bar for arbitrary and capricious denial due to being denied for FAR smaller offenses.

    OcTEApi in reply to iambasic. | March 8, 2012 at 10:56 am

    The market messiah would probably recommend a switch from institutional investors to taxpayer subsidized angel investors…

    ie here in Michigan the state economic development corp subsidized with taxpayer dollars a company who’s primary function is offshoring IT work to Bangalore, India.
    It was such a good idea that the state Municipal Workers pension system and Dept of Natural Resources retirement fund invested $6 million dollars, with a guaranteed 10 percent return per year for ten years.

    Obama thought this was such a great idea he immediately sent his Administrations jobs council representative to Detroit to meet and discuss how this should be a “model for America.”

    Public Union pensions guaranteed 10% per year on a business model that offshores private sector jobs, the same jobs that pay their wages.

    stevewhitemd in reply to iambasic. | March 8, 2012 at 12:02 pm

    Minor correction: it was a news conference dressed up to look like a Congressional hearing. Remember, the Pub leadership wouldn’t let her testify because she was a last minute substitution to the Democrats list of witnesses for that particular hearing, and the Pub leadership (correctly as it turned out) decided that since they didn’t have time to vet her, they wouldn’t let her testify.

    So Pelosi (having anticipated this; the game is played at a high level) had the “news conference as a hearing” ready to fly.

    I rather wish Ms. Fluke had gotten what she deserved — to be ignored completely. But the Democrats and the MSM (but I repeat myself) made sure THAT didn’t happen.

Sounds like an acquisition opportunity for Barracuda.

1. In a previous Carbonite post, I commented that CARB stock also has positives going for it. It moved up strongly overnight but has lost most of that gain after the market opened.

2. Maybe Friend would not have felt free to (mis)behave as he did if the Carbonite board weren’t so incestuous. But hey, among the Really Smart People who create rules and guidelines for the rest of us, it’s understood that guidelines aren’t applicable to people who are Really Smart.

    As I predicted in the other thread, the uptick that Carbonite saw yesterday was the institutional investors and the day-traders moving in for the bounce, and they likely sold out at the end of the day taking their profit with them.

    I considered doing that, but the stock price is too volitile and with the absolutely stupid rules that FINRA has in place that punish small investors who don’t want to carry a margin account, I can’t do it without a minimum 3 day committment to the stock (FINRA regulations state that if you sell a stock before you pay for it they can freeze your account for 90 days).

    Because trades have a certain period of time to “settle” (even though it’s all handled in electronic ledgers instantly now), it prevents small but savvy investors from making “bounce” trades like the big institutions.

Professor are you attempting to suggest that there may be a case against Friend, or the Board, for their failure to meet their fiduciary responsibilities to shareholders by engaging in such blatant, and irresponsible political theater, knowing that it did not comport with their business model and would likely cost them customers?

Seems like a prime opportunity for a shareholder or two to ‘push back twice as hard.’

    I think it likely that you’re going to see an institutional investor suit against Friend for violating fiduciary duties for making a business decision based on personal politics which damaged the business model.

    Mr. Friend will assert that it was a “business judgment” that he should stop advertising with Rush because he was being “threatened” with loss of business from the Liberals and the threat of “protests” and “boycotts.” It might work, but he knew (or should have known) that by publically disavowing Rush that he would create a larger backlash from his customer base, which was largely developed by advertising on Rush in the first place.

    If suit were to be brought, it would put Carbonite in a VERY uncomfortable position.

Midwest Rhino | March 8, 2012 at 10:56 am

Their business model was apparently not working anyway, since they were already losing a dollar a share, and the stock was in steady descent since it’s initial pop. Friendly could at least try to say he thought this might get a lot of free advertising, and drive liberals to Carbonite from other providers. Maybe they should now run ads on MSNBC or on Bill Maher’s show.

If there was only one competitor in the field, going political would not make sense. But since there are several, and their business model is broken, this seems to me like a potential way to reverse the downward trajectory. Staying the course with a bad plan would perhaps be even more irresponsible.

    New tech start ups (5-7 years) actually very often lose money for several years. They operate on high-cash flow in order to keep the doors open and basically on a ponzi-scheme model where the new customers subsidize the costs of the old customers until the business attains an “economy of scale” where you’ve divided the infrastructure and operating costs over a sufficient number of customers to achieve profitability.

    BTW: Carbonite already DID run ads on the liberal talk shows (including Shultz and Maddow on MSLSD, who are listed as “trusted spokespersons”).

    This may have gotten Carbonite free advertising, but at the expense of ticking off the established customer base, which seems to be fleeing in DROVES.

    As their entire business model is growth-oriented right now, by ticking off their established customers they’ve just made it significantly more difficult to survive as a company.

      Midwest Rhino in reply to Chuck Skinner. | March 8, 2012 at 7:47 pm

      Tech start ups MIGHT be able to go 5-7 years losing some money (you almost certainly know this stuff better than I) … AMZN used to lose money on every book sold, to gain market share. They seem to be OK. But they were early in the dotcom run. Late 1990’s when money was piling in to anything dotcom, companies came out at $10 and ran to 100, often because of the craze, and while they had no plan, money would pile in. Then shorts would get squeezed. Some smart people got blown out of the water in the Nasdaq 5000 tidal wave.

      But in today’s environment, it might be harder to survive. I hope this jerk goes down hard. They already advertise on some lib shows, but they could play up their stance against Rush, and maybe try to ride this wave of free advertising.

      I can’t believe their board didn’t discuss the outcome of this decision. Surely they documented how this would help their stock. If not … they will surely be sued and maybe lose from personal finances. Wouldn’t that be nice. 🙂

LukeHandCool | March 8, 2012 at 10:57 am

It looks like Carbonite has come up with its own form of business contraception as protection from unwanted subscribers.

Carbonite is now — and always has been — losing money hand-over-fist at the rate of apx. $20 million per year.

Look at its 2011 Annual Report:

The company has an “accumulated deficit” (accountant-speak for “cumulative loss”) of $100 million.

Carbonite was rescued from insolvency by its incestuous jury-rigged IPO last summer.

Losing its Rush-relationship will leave NASDAQ:CARB ever more vulnerable to the surging tsunami of competition.

Carbonite’s kamikaze CEO has effectively cut his own throat to protest Limbaugh’s jokes about Sandra Fluke’s crusade to compel other people to pay for her and Georgetown Law female students’ birth control!

    stevewhitemd in reply to Eliot Ness. | March 8, 2012 at 12:04 pm

    What this means, Eliot, is that when Carbonite finally goes Chapter 7/11, they can blame Rush and not their lousy business model, horrid execution and terrible customer service.

      Eliot Ness in reply to stevewhitemd. | March 9, 2012 at 6:39 am

      Good point. Clearly Carbonite is just another dot-com disaster in the making — as, alas, will be ever-so-many of its competitors when the online backup market shakes out.

      Carbonite used Limbaugh and Levin to stage an incestuous desperation IPO last summer that repaid its venture capital investors.

      Does anybody believe that Carbonite can ever achieve operational profitability … let alone recoup its $100 million of losses?

JimMtnViewCaUSA | March 8, 2012 at 11:16 am

It has been eye-opening to see the list of Rush advertisers who are run by left-wingers.

It appears clear that Carbonite’s CEO placed his personal political leanings ahead of his company’s interest. He is not unique. Adam Smith’s rational man looking to his own interest assumed it was one’s economic interest. However, political preference often trumps good business decisions. Hollywood would make only G rated pro-American socially conservative movies if it were motivated solely by economic gain.

    Only G-Rated movies might be a bit of a stretch. Sometimes I enjoy a movie where giant robots fight each other for 2+ hours just for mindless entertainment. Somehow I don’t foresee that ever getting a “G” rating….

MaggotAtBroadAndWall | March 8, 2012 at 11:35 am

An awfully large percent of the shares outstanding are owned by those three VCs, who were prohibited from selling until 180 days after the IPO. That 180 day period ended in February. So they are now free to trade.

FWIW, not that it matters but just out of curiosity I went through the 13-G filings and the “large mutual fund agreeing to buy nearly a quarter of the shares for sale at a 40% discount to the original target price” is T. Rowe Price.

    Exactamundo … Carbonite is clearly on track to become (what Phil Kaplan called) a “spectacular dot-com flameout.”

    Watch for the stock price to slide down to correspond with the company’s “Cash” as NASDAQ:CARB continues to bleed $20 million/year.

I wonder if Rush actually used Carbonite and I wonder if they have snooped his files. If they did, it would be justified and even a moral imperative because Rush is not a liberal and they might find some good stuff.

    According to the Carbonite Security Policy, the stored files are encrypted on your own computer first with 128-bit blowfish encryption PRIOR to their being sent to the servers.

    Thus, Carbonite might still have the files, but likely wouldn’t be able to break them to look at the data. no effective cryptanalysis of Blowfish has been found to date. Blowfish is not quite as good as the Advanced Encryption Standard, but it’s sufficient to prevent anybody from snooping unless they have your encryption key.

Anybody know how proflowers is doing stockwise?

    Proflowers is owned by the Liberty Media Holding Corporation under the division of Providence Commerce.

    Their stock price closed at $18.82 today (March 8, 2012). Since the beginning of December 2011, they’re up about $3.50.

    They also own a whole bunch of other companies, including QVC (whose revenue was up 4% last year), STARZ Media (aka Starz Entertainment Group), DirecTV (48% interest), the Atlanta Braves, Overture films, and owns a large stake in Sirius XM Radio.

    ProFlowers and Sherri’s Berries are such a small portion of their revenue that Liberty Media won’t care.

[…] Insurrection: Carbonite shoots its business model in the foot: It is significant that Carbonite not only lost access to Rush’s audience, it angered that […]

On Aug. 16, 2011, Carbonite was @ $17.14. Within a year, its steady downward turn had reduced the stock value to $9.68, where it continued to hang. On Feb. 29, 2012 the stock closed @ $9.69. Even on March 5th, the stock was still @ 9.49 but by March 8th, had lost 1.08 in value, falling at low as 8.26 on March 6th. YTD, the stock has dropped 14.84%, and dropped by half (50%) since 8/16/11.

This is not a good sign for Carbonite’s ability to hang in there. As the stock falls, investors will start to bail, wishing to cut their losses and run before the company goes into receivership or folds completely. And the company’s debt ratio makes it an unsafe bet to rebound.

Can’t say that any of that depresses me, since companies have a fudiciary responsibility to their stock holders and that does not include injecting their political view points into their business model. I would think that stock holders have a legitimate complaint against Friend, who made a decision on personal/political philosophies and not on business philosphies. One could say that he deliberately sabotoged his own company, the brunt of the loss being absorbed by stock holders.

    Eliot Ness in reply to retire05. | March 9, 2012 at 6:46 am

    Yup … Carbonite CEO Friend has effectively euthanized his anemic company, which has been bleeding out consistently for the past five years.

Henry Hawkins | March 8, 2012 at 3:37 pm

This just in: Carbonite has announced it will reorganize under a new PR plan and hit the markets under their new name ChapterElevenite.

Thanks Professor for these updates. I know I cancelled my Carbonite account, and I don’t like Rush. This is more about silencing voices that the left does not agree with. And I’m a recovering liberal.
Rush was correct to apologize, however the left does much worse to conservative women, and the DNC says nothing, I guess they want to be able to use the “war on women” line against conservatives, yet still be able to deride conserv women in a vile disgusting sexist way like they do with Palin.

So the company begging to come back was Sleep Train. Rush said “no.”

Pardon me if I can’t stop laughing. We should follow their stock too.

I use Carbonite and love it! I’m sure they will redirect thier advertising dollars elsewhere…lots of big audiences to be had out there.

Also, who cares about this political nonsense…it’s a great growing company. In fact, I heard they brought a bunch of jobs back to the US from India.

Good luck if your shorting the stock…it’s probably going to get short squeezed soon. Lots of upside ahead for CARB stock!

    Eliot Ness in reply to Kopely. | March 9, 2012 at 6:50 am

    Carbonite was a “growing” company only in the sense that cancer is a “growth.”

    They have lost $100 million over the past five years and there is little-or-no prospect of them ever becoming profitable in the future!

    Eliot Ness in reply to Kopely. | March 9, 2012 at 7:24 am

    Another observation about Carbonite’s “growth” …

    The company’s losses have been ACCELERATING … the bigger CARB grows, the more money it loses:


    2007=$11 million
    2008=$18 million
    2009=$19 million
    2010=$26 million
    2011=$24 million (after IPO)

    CARB reports that it was renewing 82% of its clients … that will change drastically now.

    Q: How does this company EVER stop bleeding cash and achieve profitability in a competitive market?

    Q: Why does anybody long-term-invest in this company unless they need a tax write-off?

[…] Insurrection: Carbonite shoots its business model in the foot: It is significant that Carbonite not only lost access to Rush’s audience, it angered that […]

[…] An excellent detailed analysis here: […]

I just came across your analysis.Enjoyed. Had very similar thoughts.

Since it is pointless trying to convince either the pro Rush or anti Rush in either direction(people have their mind made up) , Nice to see a logical analysis of the situation that is not slanted either way.

But a few more points

1)Please see Carbonite investors presentation: slide 13 is a nice slide: link to copy of slide – great additional confirm of your point.

2) I would think that an 8k might possibly have been required based on the analysis that it potentially could have been a material event. sounds like you agree ?

2) please see my initial quick analysis with slightly different emphasis on Carbonite’s actions here:

If you are interested, I had a more detailed analysis of making business decisions based on activist social media ( not a good idea):

[…] Carbonite shoots its business model in the foot – The decline in the price of Carbonite stock since it announced it was dropping its longstanding advertising on the Rush Limbaugh show is not the real story of the damage done to Carbonite. […]

Absolutely brilliant article. Would also like to point out that the top four radio advertisers are all conservatives and all on live at different times. That means that many listeners, like me, listen to more than one, if not all four. So even if Carbonite continues to advertise on Hannity, for example, many of his listeners will still boycott them for the way they treated Rush.

Rush is the big Kahuna, after all, and Carbonite has outed itself as having a leftist CEO. So don’t think Hannity, Savage or Beck listeners would appreciate listening to their spots – they would be wasted airtime anyway.

Given its financials, don’t see how Carbonite can recover from this. If I were a shareholder, I would be furious with the CEO.