Dennis,
I haven't been around for awhile, but I was sorry to see the collapse in RAIN. It brought up again reservations I had long held about management credibility and capability. We've talked the COO issue before. Now the management weakness seems all too apparent. I think Berman and company have a "dealing" mentality rather than an operational sense of how to growing and run the company. You see this in their quickness to make deals, announce opportunistic financing, sell puts, etc. Unfortunately, you also see it in some of the ill-conceived moves they have made and their disconnected ways of responding to them. I suspect that there may not be any real plans for a new COO, and the Berman & cronies tradition may continue.
Though I believe the stock is significantly oversold relative to its potential, it may suffer for awhile from its newly retarnished image. The trouble with a credibility problem is that it weakens trust around just about everything. If you feel management has been secretive, misleading or perhaps even dishonest, the mistrust grows and it is easy to question just about everything.
I think the wave of analyst downgrades points to the doubts around the company. Not the concept, which remains great, but questions about execution. When the rosy forecasts can suddenly be called into question, it isn't a big step for people to forecast further problems arising and the declining revenue trend worsening. The big problem is that the more RAIN grows the more critical the management issue becomes. Without some positive steps to improve it, RAIN may continue to be haunted by questions and concerns about their ability to keep their act together.
Good luck,
Baird |
