Sunday, August 20, 2006

Blackboard Strategy?

So I'm sittin' on the couch Sunday night thinkin' bout the Blackboard vs. Desire2Learn debacle. I start thinkin' that it's not all that unusual for no one to have known about the patent granted back in January because it's not very likely that interested parties (e-learning types and similar rogues) are scanning the output of the USPTO on a regular basis looking for goofball approvals. Still I was curious about how this remained silent for approximately six months before they announced it in a press release and almost immediately sued D2L.

So those thoughts are running through my head and slowly my head tilts slightly to one side (the left, it always seems to go that way, don't know why) and I say "Huh?!" Blackboard is a publicly traded corporation and they clearly are all about "enhancing shareholder value" (bottom of page 3, or you can just trust me), so why did they not leverage this news during the six months between patent approval and press release? If this patent is valid then wouldn't it have tremendous financial value to Blackboard and the shareholders? I don't think there's any question about that. Why, then, did they not trade on this value over the first seven months of 2006?

Just seems like a very odd time for them to be silent, except of course for that whole "we're buying WebCT but we're not a monopoly" dealio. So as I look back at various stock analysts' comments about Blackboard, I'm struck by how very different they should have been if they had known about a patent that was already approved and just sitting there waiting to build shareholder value. For example: go to The Street dot com and search for BBBB. None of the articles written in 2006 mention anything about the patent, which seems like an odd bit of information to withhold from stockholders and stock analysts.

One last comment about Blackboard's profitability. The Washington Times published an article August 15 written by Kara Rowland titled "Blackboard sees 32% Growth." In the article she writes "The educational software market continues to grow, and so does the bottom line of Blackboard Inc." She mentions that revenue jumped 32% during the second quarter of 2006 compared to 2005, but that the company "reported a net loss of $6.3 million (23 cents per diluted share) compared with earnings of $6.1 million (21 cents) a year ago." Now here's a topic that I actually know something about. I taught accounting for 17 years. The infamous "bottom line" that she refers to is Net Income (actually Net Loss in their case). Leading off the article she says that their bottom line is growing....based on their corporate ethics, they deserve to have their bottom line "grow" again at a similar rate in the upcoming year.

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