Streamedia In Turmoil: President/CEO and CFO Resign
Streamedia (www.streamedia.net) is going through some hard times. Not only has its stock price gone down dramatically since its IPO in early January, but it also lost some top management on Tuesday.
Streamedia announced that James Rupp, president and CEO, and Nick Malino, COO and CFO, both resigned. Rupp will remain as a consultant to the company for at least a year, said a company spokesperson, and will remain a board member. Malino will also stay on an interim basis to help sort out third quarter earnings, which will be released soon. He will relinquish his position on the board, however.
For many investors on the Internet message boards, this is a good day. Online critics have been calling for the resignations of Rupp and Malino for a long time, because of the company's dismal revenues. Second quarter earnings saw revenues total just $131,000. In trading today, Streamedia's stock went up over 30%.
Gayle Essary, chairman of the company, said that new management is being brought on, but the direction of the company will remain unchanged. In a statement released today, the company said that it will "pursue an aggressive policy of advantaging a number of current business opportunities".
According to a company spokesperson, the company is coming around business-wise and wanted to make sure it has experienced executive management as it turns to the future. Part of that new focus will be on finding business models that generate more revenue. "We're ready to embark on a new direction," said the spokesperson.
Board member, Henry Siegel, was named president and interim CEO while the board searches for "professional management". Siegel was recently president and CEO of Kaleidoscope Media Group and comes from a TV broadcasting background.
Aside from executive management troubles, Streamedia has also seen the resignation of two board members, James Schroeder and David Simonetti. New board members were announced today, filling those empty seats.
Schroeder's resignation occurred about two weeks ago. According to SEC documents, Schroeder left due to a disagreement with Chairman Essary. "Given the recent events at Streamedia and the vast disagreement and disarray of the principal shareholders, I feel that I no longer represent the views and interests of those shareholders," he wrote in his resignation letter. "I serve at their discretion and I, in good conscience do not agree with the proposed direction of this company as set forth by the Chairman."
Schroeder, speaking from his current position as vice president-tax at the Thomson Corporation, wouldn't give any insight into his resignation. "The board was not going in a direction I could support. I'll just leave it at that," he said glumly, indicating his letter published in the SEC filing.
Speculation on the message boards is that Streamedia is losing money at an accelerated pace and may soon run out of cash. Nevertheless, Siegel said that the company expects to report "record revenues for the 3Q and 4Q" and remains on a "path to profitability".
According to SEC filings, Streamedia will be making a new stock offering soon valued at $1 to $3 million. In a filing from September 27th, the company said that the proceeds from the Private Placement Proposal securities offering are critical to the "continued success and operations of the Company."
There will be a special shareholders meeting on October 27th, which might shed more light on today's events and the upcoming offering.
Although touting itself as a streaming media company, former CEO, Rupp, admitted during a recent interview, that streaming plays a small overall role at the company. It focuses mostly on web design and consulting services. Streamedia is perhaps best known as the owner of content site Bijou Cafe (www.bijoucafe.com), which it acquired early this year.
Perhaps some insight into the future direction of the company was revealed when Essary said he signed a letter of intent to acquire an undisclosed equity interest in Nomad Media (www.nomad.ch), a streaming media company based in Switzerland. Essary is also president and co-founder of the Streaming Media Alliance, an organization that is looking to promote streaming worldwide.
"You never know what the future might bring," said the spokesperson, "but there's reason to be optimistic."