Summarized They Shot the Messenger and Their Foot

[David Farber <dave () farber net>]

http://select.nytimes.com/2005/10/30/business/yourmoney/30gret.html

Earlier this year, after he downgraded his rating on Digital River, a  
provider of electronic commerce services, the company retaliated,  
demanding that his firm drop its research coverage.

...But his final reports gave explicit warnings to investors that  
rising competition in the company's biggest business - distribution  
of antivirus software - could hamper Digital River's growth.

...First, Internet service providers were starting to distribute anti- 
virus software directly to their customers, cutting out middlemen  
like Digital River.

..."Given Microsoft's obvious market penetration, we believe any  
security services offering could dramatically disrupt the market for  
third-party antivirus and related services offerings," Mr. Meier  
wrote last January in a report downgrading Digital River to a "sell."

..."Fairly major market forces are in progress that we don't have a  
lot of influence on," said Joel Ronning, Digital River's chief  
executive, in the Wednesday call.

...Reached at his office last week after the company's disclosure,  
Mr. Meier said: "I cannot comment on Digital River.

...None were related to the analyst's core argument that increased  
competition in Digital River's antivirus business would cut into its  
incendiary growth rates.  Instead, the errors related to options  
grants made to Digital River executives and directors, confusion  
about the nature and date of a filing the company made with the  
Securities and Exchange Commission and a reference to the chief  
executive's stock holdings.

Mr. Meier apologized for the errors and corrected them in a research  
report published about two weeks later.  But that was not enough for  
Digital River; it demanded that Mr. Meier and his firm stop  
researching the company....  "They issued the retraction and agreed  
that they would drop coverage and requested at that time that we not  
pursue legal action.

...On March 15, Mr. Meier wrote his last research report on Digital  
River, reiterating his sell recommendation.

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