• Bloomberg BusinessWeek, Wednesday, September 8, 2010 10:52 AM

Sales of Rosetta Stone language-learning software have been weak but it's not because of a lack of consumer demand, Ben Steverman reports. CEO Tom Adams blames it on "something weird going on in the media market."

The company uses cheap advertising bought in the spot market drive sales. When the spot market unexpectedly got expensive this year, the company advertised less, which hurt sales in the U.S. (down 2% last quarter; 15% on the year), he says. International sales, meanwhile, are booming -- and teaching English to others is truly where the action is. "While language learning here in the U.S. is cake, in the rest of the world it's bread," Adams says.

He sees more good news, despite a sliding stock price that analysts attribute to the departure of two other key executives, on the horizon with the imminent roll-out of an Internet-based product that adds online games and the chance to interact with native speakers, called "coaches," to Rosetta Stone's usual approach.

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