When Carbonite Inc. stock took a quick plunge this week, there was an obvious consensus about what caused the move: The company pulled advertising from Rush Limbaugh’s talk-radio program after the controversial host made inflammatory remarks about a Georgetown University law student.
Yes, the market could have feared that Limbaugh’s fans would cancel Carbonite’s service, an online back-up solution for consumers and businesses, or mount their own boycott. Or maybe investors assumed Carbonite will suffer because it will no longer have access to Limbaugh’s audience.
Jaffe goes on to point out that Carbonite has underlying business problems which are driving the long term decline in the stock price, but quotes another analyst as pointing out that the result drop likely is attributable to the Rush controversy:
“There is no way Carbonite’s underlying business is changing as much as the stock trading says it is on a daily basis,” said David Trainer, president of New Constructs Inc., a research firm based in Nashville. “That says there is a lot of excessive trading going on; maybe it’s the Rush thing or maybe not. … For the average investor, a stock this young being pushed around by like this traders is a wing and a prayer.”
However, the reality is, with the exception of a zealous few, there will be likely little customers to be had amongst the activists – certainly not the amount of customers that were reached by the Limbaugh show. By the time next Valentines day rolls around will the money spent by the activist come close to money spent by listeners of Rush- likely not even close.That being said,
One more thing : I don’t know if boycotting Limbaugh was a good business choice and I think, no one else knows either. What I do know is: making decisions based on the loudest screamers of the moment, does not usually bring about good business results.
That was my first reaction when Carbonite dropped Rush. How many of the DailyKos and Media Matters screamers actually used or were considering using Carbonite. Probably few.
Why did Carbonite make such a precipitous decision?
There are few things that cannot wait for Monday morning, yet Carbonite issued its statement on a Saturday night, in what appears to be a matter of executives’ personal and political opinions outweighing shareholder interests.
Shareholder are getting massacred as a result.DONATE
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