It was really just a matter of time. Taser (Nasdaq: TASR ) announced that it was suing USA Today parent Gannett (NYSE: GCI ) after a newspaper story last month claimed that the electrical output of Taser's X26 stun gun runs between 2,100 and 3,600 amperes. In reality, the X26's output is just a millionth -- yes, just 0.0021 to 0.0036 amperes -- of the amount misrepresented in the USA Today article.
Journalists make mistakes. Trust me, I know that all too well. The problem here is that this is the culmination of what Taser perceives as biased coverage by the media in general, and by Gannett's USA Today and Arizona Republic in particular.
Does this lawsuit stand a chance? It's going to be awfully hard to prove that a media company like Gannett was trying to be malicious, even though the story falsely claimed that a Taser is more powerful than an executioner's electric chair. Taser claims that Gannett's sensationalistic headlines have cost the company more than a billion bucks in market cap. While it would be naive to think that some of the stock's decline was not the result of the company's own handiwork, it's hard to deny that the media has influenced public perception of Taser. Bad press has had an impact on orders and has slowed the adoption process of stun guns as the weapon of choice for police departments around the country.
Living in Miami, a Taser town, I have seen this firsthand. A truant girl gets Tasered away from school? An unruly kid wielding a shard of glass in self-mutilating defiance in a principal's office is ultimately subdued by a Taser? Yes, welcome to Miami. The problem is that while these may seem like petty, non-fatal confrontations, they became front-page fodder locally -- and, eventually, nationally.
Is it right that the company, and its shareholders, should have to suffer financial hardship just because stun-gun technology is so cool to write about? A routine call to the precinct ends somewhat successfully, and it makes the paper only because a Taser was involved? A confrontation involving a Taser that ends in a fatality is clearly newsworthy. Everything short of that? Give me a break.
Is it fair? Not really. Does Taser stand a chance with this lawsuit? I don't think so. That's not the point, though. Taser can still win by presenting the lawsuit without actually seeing it through to the end. Why? Because this will be Taser's moment in the media spotlight to educate the public on stun guns.
Last year, our Motley Fool Rule Breakers newsletter service recommended Taser as a worthy stock. It obviously hasn't panned out that way. Still, despite Taser's share-price debacle, the average Rule Breakers pick has more than doubled the return of the S&P 500. That's why it's good to have other newsletter picks like Archipelago Holdings (NYSE: AX ) and Steiner Leisure (Nasdaq: STNR ) to offset the growth stocks that don't quite pan out. Swing for the fences, investor, but swing often.
Then again, if Taser somehow manages to win the media war -- a battle that won't be fought in the courtroom, by the way -- it could very well sway public support for stun guns as alternatives to pistols. That would be good news for Taser, and perhaps even for speculative penny-stock upstarts such as Law Enforcement Associates (OTC BB: LENF) and Stinger Systems (OTC BB: STIY).
And, yes, for Rule Breakers subscribers as well.
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Longtime Fool contributor Rick Munarriz does feel that Miami is a safer town under Taser's watch, even as Hollywood types are filming the Miami Vice movie around town. He does not own shares in any of the companies mentioned in this story.The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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