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    Has Carbonite accepted responsibility?

    Has Carbonite accepted responsibility?

    Carbonite has been flying below the radar the past few weeks, as companies like Arby’s have incurred the wrath of conservatives for pandering to the Media Matters inspired and coordinated attempt to drive Rush Limbaugh from the airwaves.

    Carbonite was the most visible and self-righteous of the advertisers to drop Limbaugh in the first few days after his comments about Sandra Fluke.  Carbonite’s CEO David Friend invoked concern for his daughters as the reason Carbonite was dropping Limbaugh.

    Yet Carbonite continued to advertise on Howard Stern (notorious for his demeaning antics towards women, including calling Sarah Palin the “C” word) and Ed Schultz (who called Laura Ingraham a “slut,” for which he apologized, and regularly attacks conservatives in extremely nasty terms).

    Media Matters still is touting Limbaugh’s loss of Carbonite:

    If we just look at Carbonite, which probably had the strongest relationship with Rush, their departure is still visible on the front page of Rush’s website – there’s now an empty space where there used to be a permanent Carbonite ad. Carbonite also issued one of the strongest statements in their explanation for excluding ads from Rush’s show. So it seems especially unlikely that they will return.

    So how has Carbonite been doing the past month?

    Its stock price has recovered and as of the close of the markets yesterday was almost exactly where it was before Carbonite dropped Limbaugh.

    Several top insiders have sold shares recently, although not in numbers large enough to indicate an exit strategy, yet.  Carbonite also experienced an embarrasing service outage in late March just after announcing‘World Backup Day’.

    The real test, however, will come when Carbonite makes its next quarterly SEC filing, which should reveal how Carbonite has fared in its key measures of subscriber growth and retention:

    Once we acquire a customer, keeping them is of the utmost importance. Our quarterly retention rate has been strong historically, running around 96% to 97%. Retention is essential to profitability since we make most of our money after the first year, which was burdened by customer acquisition costs and initial support costs.

    As I documented before, Limbaugh was a key part of Carbonite’s model.  Carbonite has taken to television and is heavily promoting discounts on its products to bring in new subscribers.

    Has Carbonite accepted responsibility?  We’ll find out.

    Carbonite’s Twitter account is @carbonite, and it has a Facebook page.

    Update 4-11-2012 – Carbonite’s 1st Q 2012 results will be announced after the close of the markets on May 1, and there will be an open telephone conference call with David Friend at 5 p.m. Eastern that day, call in number 877-329-7568.


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    vertical | April 10, 2012 at 11:28 am

    Excellent observation regarding the importance of customer retention in this now commoditized business. I quit Carbonite after the Rush fiasco (still in the trial period) and found better options elsewhere.

    Nearly all Carbonite’s customers pay for one year up front due to substantial pre-pay discounts, and are reluctant to change mid-stream with the time-consuming initial data backup completed.

    The true test will come when as customer’s pre-paid periods expires. Many Rush fans will be looking elsewhere and will find better bargains, as I did.

    Carbonite also needs to invest heavily to keep up with more nimble competition (and potential deep-pocketed future competitors). Problem is, they’re still losing money big time and don’t have it to spend…

    JimMtnViewCaUSA | April 10, 2012 at 11:33 am

    Typo: “has faired” should be “has fared”.

    Don’t forget to avoid Caesar’s Pizza, too. An easy task since their pizza is cr*ppy.

      William A. Jacobson in reply to JimMtnViewCaUSA. | April 10, 2012 at 11:41 am

      thanks, fixed

      Aridog in reply to JimMtnViewCaUSA. | April 10, 2012 at 1:55 pm

      1 percenters Illitch and family are of course sponsors of Obama, as are multiple 1 percenters across the country … Obaama is the man man looking out for the 1%, with key advice from other 1 percenters like Warren Buffet and Jeffy Immelt … and they all know his campaign rhetoric is bullshit for the 99%, and they’ll get their favored treatment if the Messiah is re-elected.

      Vis a vis Detroit … Illitch, Karmanos, Gilbert, Fisher, various Fords, et al have actually done some good things for Detroit, but you can bet your heiny that none of them live there or anywhere near close by.

    JackRussellTerrierist | April 10, 2012 at 4:36 pm

    I think it’s a little early to call the game in favor of Carbonite. It’s a subscription service. Let’s see what happens over time/through attrition as those subscriptions come due. My husband and I were considering a Carbonite account. Of course we no longer are. We refuse to feed the beast. A friend of ours who is an engineer told us about two weeks ago that he just closed his Carbonite account/let it lapse because of the Rush boycott.

    Carbonite’s gaffe may impact them more deeply than is momentarily evident.

    Eliot Ness | April 11, 2012 at 10:14 am

    David Friend’s Carbonite business plan appears to be to dream of a pot-of-gold at the end-of-the-rainbow — sure that eventually he will cash in.

    But Carbonite will run completely out of money in 2015 unless it stops losing $2 million per month.

    The next four quarterly reports will tell the market what it needs to know about the “Limbaugh effect” … that is, the magnitude of the flight from Carbonite by Limbaugh listeners.

    Carbonite spends a fortune on advertising. They could break even if they stopped all advertising. But could they hold their subscriber base?

    CARB investors have already lost $100+ million. After seven years in business, isn’t it time for this company to begin to make some money? Otherwise, why buy NASDAQ:CARB when there are other companies that do not lose money?

    Eliot Ness | April 11, 2012 at 10:18 am

    Carbonite will lose another $100,000 today, as it did every business day during 2010-2011.

    During 2007-2009, the daily losses were smaller … but not by much.

    The average for the past 7 years has been about $60,000 per business day, so Carbonite’s losses have been accelerating.

    Carbonite’s grand total cumulative losses are greater than $100 million.

    Inquiring minds want to know: When will this stop?

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