Most people have heard it ringing for years, but the death knell for DVD manufacturer and distributor Cinram International was heard loud and clear by everyone Friday after the company announced that its units will be delisted from the Toronto Stock Exchange.
A precise reason wasn’t provided; the company simply said that it no longer meets the listing requirements.
Cinram has long been troubled because it’s an analog company in a digital world -- or something like that. Cinram manufactures and distributes pre-recorded DVDs, Blu-ray Discs, CDs, and CD-ROMs. When was the last time you heard anyone say CD-ROM, especially in a world where Apple is releasing the Thunderbolt?
Cinram first ran into problems about a decade ago when Napster popped up on the scene, but the company recovered because it signed a long-term distribution agreement with Warner Home Entertainment. That deal ended in 2010, and since then the company has fallen -- fast. The stock is now worth just pennies.
The odd thing is that Cinram still makes money. Earnings before interest, taxes and amortization last quarter were $28.5-million in the fourth quarter of 2011. But that’s not really the point. The year prior, they were $49-million in the same quarter, demonstrating just how quickly they are plunging.
Understanding its troubles, Cinram hired Moelis & Company to find a buyer, but nothing has materialized from these talks.
Cinram’s downfall is a perfect case of how rapidly changing technology can be disastrous for companies. During the 1990s, Cinram’s stock grew about 21 per cent a year. Now it's disappearing.