In the United States and the United Kingdom, the Motion Picture Association of America, the main lobbying arm of U.S. film studios, filed civil lawsuits against more than 100 operators of BitTorrent "tracker" servers that point to locations where digital files of movies, music and other content can be found.
SAN DIEGO -- There was a lesson I learned long ago. It was in the mid-1990s. I would write almost daily in my column, which then appeared on the front page of the San Francisco Chronicle, about a now-defunct company called Media Vision. At the time, it was one of the hottest in Silicon Valley.
I've told this story here in one form or another several times in the past. But it warrants telling yet again today with the way stocks like Travelzoo , Overstock.com , Taser and even OmniVision have been acting.
After its stock had jumped 22 percent in the wake of my latest critical stab at the company, Media Vision's then-CEO, Paul Jain, called me and crowed, "That confirms that this is a high-quality story."
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It was
They were -- until several months later, when the company reported a big disappointment, causing Media Vision's stock to crater. Several years later, Jain went to prison after it was discovered the company was booking revenue on products when the parts for some of those very products counted as sold were still on a slow boat from China. (I'm not kidding.)
It's a story that often resonates in my head, and it's one reason that today, more than 10 years later, I still take what many CEOs say with little more than a grain of salt -- especially those who are keen on bragging about how well they're doing and talk along the lines of how they're going to "burn" the shorts and critics.
Don't get me wrong: There are some plenty of really good CEOs out there who go about their business and live or die by their numbers -- not their stock prices. If the numbers bear out, the stock prices go higher.
It's human nature to want stocks to rise, but too often they rise merely because of nothing more than unsustainable momentum. Unfortunately, that momentum lulls investors and even company executives into thinking they're smart, when they're really just parading around the chairs while the music is playing.
That's why, when I used to work at TheStreet.com , I would often write that it was important to read Jim Cramer because he would tell you what was going on at the "lunatic fringe" of the market. There's nobody who understands that world better than Jim, who just last week wrote of Taser and another company: "They have made fortunes for people, no mean task, and they have enough hope to do it again. I salute them and their ilk rather than thumb my nose at them. That's for old-timers who have forgotten that the process is
Damn the fundamentals. But Jim's right, and that fringe started having a big influence on the market in direct correlation to the growth of the Internet and popularity of business TV, both of which helped speed the flow of information. But it's all really a game, and in the end, as we all know -- and as companies like Krispy Kreme and Netflix remind us -- it works until it doesn't. You can justify all kinds of valuations using all kinds of wacky metrics as long as stocks are going higher. It's funny how some of those methods of valuation look so silly after the fact.
Is it different this time? No -- just as it wasn't during the bubble. When the music stops you still need to find a chair. It's remarkable so many investors still haven't learned that lesson. What's happening, after all, is
Others pointed to the company's cash generation last quarter, which on the surface looks impressive. But cash generation can always look good if you defer payments to suppliers or engage in other maneuverings. Notice that "other" current liabilities rose by $16 million. (You have to wonder what the "other" means.)
Meanwhile, there were readers who said I should be careful about questioning OmniVision, because it's the leader in its industry. Well, I realize that, but in tech, especially chips, today's leader is likely to be tomorrow's laggard.
Success in technology breeds competition, which for OmniVision is coming from the likes of Micron Technology . Micron made and Agilent . The ones that I think are coming on the horizon you have to keep your eye on would be Toshiba , Samsung , and probably even Sony here at some point. So I think the landscape probably changes pretty dramatically over the next couple of years."
If not sooner.
On this topic not only did I disagree, I told him that if anything, the press isn't negative enough. And can you believe it? He called me a perma-bear! (Who, me?) Neil also wondered how anybody can be so glass-half-empty when they live in San Diego. Well, I muttered something like, "It's been cold here lately." (By the way, I'm not a perma-bear but a perma-skeptic -- big difference.)
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