Marty,you said it all. Not only is the market not efficient but people are stupid.
In closing everyone should remember that this company wasn't suspect of fraud until the two reports came out. Muddy Waters in particular claimed that the 2009 revenue of $95m couldn't have been more than $17m. Their rationale? "We estimate that CCME generated 2009 revenue no greater than $17 million. We base this estimate on the metric of revenue per employee in sales and marketing" and "CCME’s 10-K suggests that it has only seven sales people."
I suggest readers look at the 2009 10K since Tracy didn't appear to. The company makes two disclosures on Page 15: " For the year ended December 31, 2009, CME derived 78.6% of its revenue from selling advertising time slots to advertising agencies" and "As of December 31, 2009, CME employed an advertising sales force of 65 employees." Hard to use a metric of revenue per employee to justify fraud when almost 80% of the sales effort is outsourced and your starting point of employees is off by a factor of 10x. So this is what started the discussions about fraud. Now everyone appears to be backing off the original outrageous claims while trying to argue that a less significant degree of fraud could exist. Sure that's possible but again remember that the conversation only started because of outrageous claims that most are now distancing themselves from.
AI
