Some news from Raging Bull on Friday 15th June...
Downloadable
music site Emusic.com (EMUS), citing "preemptive" cost-cutting
measures,
announced it would lay off 40 employees, or 18% of its workforce.
Traders
responded by bidding the stock 3/16 higher to 2 7/8.
The company
recently purchased RollingStone.com for $120 million, and is facing
severe
competition from cybermusic renegade Napster, which allows users to
download music files for free, whereas Emusic.com charges money to do the
same.
Like many other small Internet companies, questions hover around
EMUS' cash
situation.
Cp3 weighed in with an opinion on EMUS and
its place in the digital music
landscape:
"Their burn rate is
excessive as all dotcoms are, and they need to control it.
It's obvious
they got the message from the current condition of their stock
price. I
think the street has a fair valuation of the stock price at the
c! urrent
time. EMUS may have a book value right now of about $6.50, but as they
burn through the cash, it will go lower. Any half-witted investor knows
this
and that is one of the reasons why EMUS is a $3 stock.
Wall
Street will listen to this, and will watch with a close eye, especially
when... the RIAA knows that they cannot stop the MP3 format. It's becoming
a
very popular item and it's only a matter of time before they figure out
how to
capitalize on it. You know EMUS is looking for ways to make it
profitable for
RIAA as well as EMUS. In the meantime, I think EMUS Rolling
Stone acquisition
was the best advertising bang for the buck. I'm not
aware of any other MP3
company that had that kind of foresight."
For more from the Discussion Board see:
http://www.ragingbull.com/mboard/boards.cgi?board=EMUS&read=2074
Discl: hold ITC
See IRG research reports
