Is SunnComm A Sham?

from the questions,-questions,-questions... dept

SunnComm has been well known among folks who follow the copy protection space, due to their well-hyped product, which is also easily defeated by holding down the shift key. However, the company is apparently also famous in some circles for a variety of somewhat sketchy financial moves that have some wondering if the company is really just a big stock scam. The Register tries to take a pretty in-depth look at the story behind SunnComm’s financial dealings. They point to a variety of questionable transactions (reverse mergers and the like), press releases on deals that never actually showed up, and associations with people accused of fraudulent dealings by the SEC. Having heard much of this before, SunnComm’s CEO (surprisingly) got on the phone with the reporter and responded to each question, trying to make the case that, while mistakes have been made, the company is legitimate and is moving forward. Of course, recent announcements about new technology purchases seem to have gone nowhere, so it is increasingly sounding like a pump-and-dump type deal. There are simply too many announcements that turned out to be nothing in the end.

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Comments on “Is SunnComm A Sham?”

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Chris Reuter (user link) says:


It looks to me like Suncomm is a legitimate business with a serious problem: its management honestly believes that DRM can work.

Remember, they started out as an entertainment company. Their biggest asset is likely their ability to talk to other entertainment companies. But since their technology section is all either aquired or grafted on, the management probably doesn’t understand that world. The end result is that they think that their product will someday be able to prevent piracy without harming sales. This is almost certainly the basis for the corporate culture, the thing that nobody there ever questions.

If you look at it that way, their other behaviour makes some sense. They looked into buying Dark Noise because the management honestly believed it could work, then dropped the deal when (I’m guessing) it became apparent that it didn’t. And they dropped the deal with the Asian company because they crack DRM over there.

They’ve now hired their own researchers to solve the “analog hole” problem. I really have to wonder what communications are like between the researchers and management. My guess is extremely disfunctional.

Peter Smithson (user link) says:

Re: Sunncomm Where there is smoke ...there is fire

Where there is smoke there is fire.

I met Jacobs and his reckless band of merry men in 2000. I was not impressed then with his “used car salesmen” approach, and I am really unimpressed with the seeming lack of progress he has made since then. I read through the British news story.

Scary. It appears Jacobs continues to walk (drunken stagger?)a very fine line on what is lawfull and waht is not. He likely may (or may not) believe his “spin,” but the number of events and issues he and his little operation constantly have to face seem rather bizarre. If the technology is so great, why is it not adopted in an industry that could clearly use it. Perhaps it is a great product with a lousy sales and marketing effort? Surely they are trying to sell it to more than BMG? Aren’t there other record company’s who might use it? Perhaps they have not got around to contacting these other company’s yet.

So what of the SEC? They appear to be very lenient to a company that clearly flauts the fine line they walk. When I last looked up the major shareholders, (those with the most to gain)- Peter Jacobs, George Fancher, John Shebanow, Al Golusin, Bill Grafham…they all seem to be working the angles for personal gain…that is… the highest stock price…at whatever cost.

Having met some of these colorful but shady characters, I can not say I am surprised at the poor progress over the past 4 years. I feel bad for the 262 smaller shareholders who are being tossed about in the sea of no competence. You have to ask “why” a CEO who is clearly of limited ability, is not tossed out by the board?

Therein may lie your answer. Watch Sunncomm to see what the next turn might bring. I am sure it will be interesting, VERY creative, and highly entertaining.

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