There are plenty of shareholders who think like me...

In case anyone thinks I'm a wild-eyed lunatic howling alone in the wilderness, I thought I'd reproduce this from www.iii.co.uk, posted by 'eagle51' (NB: I post as 'chickenmadras' on iii). Good to see that others are thinking the same as me. I cannot - and nor can anyone else as far as I can figure it - think of a single good reason why Blinkx management has gone about the Miva 'bid' in the way that they have. From where I'm standing it looks like a totally amateur and cack-handed attempt at a takeover. And if I'm wrong and the Blinkx management team really do know what they're doing who's fault is it that shareholders don't know what's going on? If Blinkx management has been totally appalling at communicating their Miva strategy (assuming they have one), doesn't that vindicate what I've been saying?

-----------

"Chickenmadras could be a person who has posted on this board in the past and has merely created a new identity, norman - this is something which seems to happen a fair bit.

Whilst I do not agree with everything he says, he does make some relevant points about which some shareholders may have genuine concerns - me included. I think SC has made a ham of the MIVA 'non-bid'. He has not at any stage made it formal, choosing instead to give an indication of the price at which he would be prepared to make an offer. Contrast this with the way Autonomy has negotiated 3 much larger deals in the past 2 or 3 years and presented them to the shareholders and the world at large as 'fait accompli', sending out a message of initiative, competence and stunning execution which seems to have been lacking where MIVA is concerned. If something is worth going for it is always best to give it 100% and to fail to get the MIVA directors on board before going public with an indicative offer was always asking for trouble. No-one has come out of the situation with any credit and it should not have been allowed to happen.

A large part of the loss in value of blinkx shares is undoubtedly associated with it being an AIM stock. The index fell 68% last year, but whilst I haven't checked the relevant numbers, my feeling is that blinkx's sp has fallen further than this, which might well have something to do with MIVA and the perceived experience and competence of SC as CEO. He is undoubtedly technically brilliant, but at 28 (or perhaps now 29 he is very young to be at the helm of a listed company - particularly when others around him are mostly young and inexperienced as well. The new finance man blinkx took on does seem to have more experience, which partly addresses what might have been seen as a weakness. I don't know to what extent the non execs have been involved in blinkx's affairs to date - not much would be my guess judging by what has happened.

There is a danger of falling in love with a share and failing to see when things aren't right. blinkx still has a very small share of the market it operates in, regardless of the apparent brilliance of its offering. I have tried using it quite often and the other day (for instance) was looking for the video of John Bird & John Fortune, where George Parr is talking about the sub-prime crisis. I tried a few combinations of words using the blinkx site but came up with nothing I could immediately see was what I was looking for. So I tried Youtube and up it came first entry on the list. This did not fill me with confidence and pride as a shareholder in blinkx. I know it has other innovative products to offer, but we don't yet know how these convert into $ and the company hasn't even given us a clue to date. 

The jury is out as far as I am concerned. It is not sufficient in my view for SC to occasionally appear wherever 'looking confident', whatever this means. I prefer a flow of information that enables me to at least form an opinion on whether the company is doing well and is on course to meet or beat expectations. We haven't had this flow of information, nor has the company's PR been up to much as far as I can tell. Why isn't it screaming out its message from the the hilltops, rather than relying on word of mouth and messages passed on by those who know where to look to find out its present market share?

On balance, I think it might be a good move for a bigger outfit - perhaps Microsoft - to acquire blinkx, but it may not be that easy. I can't recall if there is anything in the agreement for blinkx to use Autonomy software that might scupper a deal. The danger to me is that blinkx disappears into the pack and becomes just another search engine pitching for a small share of a very big market. Hopefully someone more familiar with the industry will tell me this is impossible to happen. I am afraid that hope alone that blinkx does have something different that is of serious practical interest to a large part of the market is not really sufficient for me. When a share price drops this far below its float price and stays there for so long prompts me to ask: "if what it has is so good, and the share price is so low, why hasn't someone bid to buy it"?

On balance, I think I would bite off the hand of anyone that offered 60p a share. There are plenty of other more tangibly undervalued compaies out there at present to invest in and funds are invariably limited. It is a simple question of what offers the best value. 

I remain a holder for the present - no better, sad to say. 

IMO/DYOR"

from The Week 31st January 2009

Of course, when Blinkx is taken over (by Microsoft, or by Yahoo, or by Google, or by Murdoch, or by Diller...) Dr Lynch will be worth rather more, since he personally owns about 8% of Blinkx shares (and Autonomy about the same amount again).

[edit] I like the bit about 'wanting to hide gold under the floor and support myself'. I take that to mean he would be open to a bid for Blinkx at the right price. He clearly doesn't think Blinkx is central to Autonomy's business otherwise he wouldn't have floated it as a separate business in the first place; so why not make another pile of cash out of the conflict between, say, MS and Google? 

Chandratillake breaks cover...

Interesting that there was a lot of media activity by Suranga Chandratillake yesterday - he was on several TV shows promoting Blinkx.

The question is, is it a sign of confidence or of desperation? Is Blinkx doing so well that he now thinks it's the right time to ramp up Blinkx's hitherto-woeful PR/media activities to promote the company and reassure shareholders? Or is the criticism - on this blog not least - getting to him and  he feels the need to justify his existence? 

Of course, if he wanted to reassure shareholders that he knew what he was doing there's a really simple way to do so:

1/ resolve the Miva situation. Either give Miva a clear - and very short - deadline to accept Blinkx's 'revived' offer of 55c a share (Miva shares closed yesterday at 16c, so 55c represents a massive premium - you ask me, Blinkx should go back with a take-it-or-leave-it 25c a share offer with a week to accept) or just announce Blinkx isn't interested any more and walk away completely.

2/ if the Miva 'deal' falls through use the money that would have been spent on a share buyback to screw the shorters who have been manipulating this stock and to drive the share price higher, back to somewhere near the IPO price of 45p.  

3/ Chandratillake, Opzoomer and other senior Blinkx staff should buy Blinkx shares in the open market to demonstrate their own confidence in the company's future.

I really, really don't understand why Blinkx is so adamantly opposed to letting shareholders know what the hell is going on with the non-bid for Miva. The BLNX share price has tanked since mid-October when the bid was 'revived' and shareholders have been told nothing. Is it any surprise many of us are angry as hell? Maybe I'm being unfair and Chandratillake is being very very clever. Or then again, maybe he's being the other thing...  

Contact details for Utarget

Note to self: include Rupert Murdoch in the next batch of letters. Why should News Corp/Fox just make money from Utarget's media planing and buying services, when they could buy Blinkx and make money from the back-end tech as well. Vertical intergration has got to be the way to go...

From New Media Age 2009-01-29

letter to Steve Ballmer 2009-01-27

27^th January, 2009

 Mr. Steven A. Ballmer, CEO,

Microsoft Corporation

One Microsoft Way
Redmond, WA 98052-7329
USA

 

Re: Blinkx

 

Dear Mr Ballmer

Like many people who have been in the IT industry for a very long time, it was with great regret that I read last week about Microsoft’s first layoffs in the company’s history. It is surely a sign of the times that a company so central to the computer/information revolution and as iconic as Microsoft should be so impacted by the current global economic downturn.

However – and with the greatest possible respect, Mr Ballmer – I cannot help feeling that part of the reason for the deterioration in Microsoft’s financial position is that it seems to have lost its sense of direction.  It has lost Windows market share to Apple. MS Office is losing ground to OpenOffice and others. IE is under attack from new browsers such as Chrome, which gained a 1% market share in about 24 hours after its release. Microsoft is trailing a distant third in search behind Yahoo and Google. Lastly – but not least – surely it is only a question of time until a Linux distro comes along which is easy enough to install and intuitive enough to use to undermine, perhaps fatally, the Windows franchise itself.

In Short, Mr Ballmer, from where I’m standing it looks like Microsoft is losing the war in its traditional battleground of computer OS and apps.

If that is true, the obvious thing to do is to open another front in the computer wars. And in my view the obvious battle to choose is video search.

I am a shareholder in Blinkx, of which I’m sure you will have heard and which claims to be – and I’m sure is – “the world’s largest and most advanced video search engine”. It has currently indexed some 32 million hours of online video (about two-thirds of all such video – and almost certainly more than 32 million hours by the time you read this), as well as releasing innovative products such as Ad Hoc and, soon I’m sure, Transaction Hijacking to enable different aspects of video search functionality. I’m sure you are aware of Blinkx, as it is has an agreement in place with MSN UK as well as many other media partners such as BBC News etc.  It has more than 500 partners in total (and will have added more by the time you read this, I’m sure).

However, for shareholders such as myself there is one major problem. The management team – and in particular the CEO Suranga Chandratillake – seem to be, from where I’m standing, much more interested in the technology for its own sake than in delivering shareholder value. Mr Chandratillake is a technical genius, I have no doubt and am quite happy to concede: and yet I have very grave doubts about his abilities to lead a rapidly-growing company such as Blinkx.  

This is not only my view, nor is it a conclusion to which I have come lightly or in the absence of any facts or evidence.  I would cite not only the catastrophic (in my view) decision not to release the Transaction Hijacking product in time for Christmas 2008; I would cite also the disastrous ‘bid’ for the American company Miva, which Blinkx originally launched at 120c and then, when rejected, ‘revived’ at 55c a share (it is unclear among many owners of Blinkx stock whether or not this ‘revival’ constituted a second formal bid. This is not a matter on which Blinkx management has seen fit to enlighten shareholders). The uncertainty around this ‘revival’ of the Miva bid caused the Blinkx share price to crash by round 50% in mid-October when the bid was ‘revived’ – from c. 25p to c. 13p (the IPO price just over 18 months ago was 45p). It has not recovered since, leading to the very great dissatisfaction of many (not all, it must be said) Blink shareholders.  

Of course I am disgruntled: my motive in writing to you is very obvious. But the current situation is one from which two out of three parties could gain, were Microsoft to launch a bid for Blinkx. Microsoft would win as it would gain at a very reasonable cost what gives every impression of being, with decent management, a world-beating video search engine. Blinkx shareholders would gain as they would receive a premium – most of them – to their purchase price. A bid of 60p a share or thereabouts would, I feel sure, gain the interest of the large institutional shareholders who bought in at the IPO and have since seen an approximate 75% drop in their investment (and this for the third-largest video search engine in America, after Yahoo and you-know-who).

Of course I am not unaware of the chaos currently raging in world markets – who could be?  If I thought that Blinkx management cared about its shareholders or had a reasoned plan moving forwards I wouldn’t be writing to you. Sadly – and the non-conclusion of the Miva bid one way or another is, in my view, very clear evidence for this – the Blinkx management team seem concerned only with the Blinkx technology for its own sake. In my view they seem absolutely incapable of delivering shareholder value. The best bet for Blinkx shareholders seems to be a takeover of the company.      

Yours sincerely

From New Media Age 22nd Jan 2009

Google annotations - a folksonomy to equal Blinkx's algorithms?

In the 'What's new' box of the Google home page is 'Video Annotations' - the ability for users to add background information or comments about individual videos.

A pretty clear attempt, as far as I can see, to get the users to do YouTube's work for them in creating a user-generated taxonomy ('folksonomy') / metadata schema for YouTube videos, thereby saving Google the trouble of doing it themselves. And with 8 hours of video being uploaded every minute of the day and night it's hard to see how Google could do it any other way. Unless of course they were to buy a certain video search company that has software to automatically analyse both speech within a video and what's actually happening in the video frame-by-frame. You couple that software with a server farm and you are able to analyse all those videos as they come in - you then have a massive, automatically-updated index of video content: an index against which you can either place text ads next to the videos or pre-roll/un-roll etc ads within the videos...

A solution to Microsoft's problems...

"Microsoft feels strain as PC market shifts" Chicago Tribune

Maybe Microsoft needs more strings to its bow? Like video search, for example...

We know a video search company that would make a perfect fit for Microsoft, don't we boys and girls? Cheap too, with the share price as low as it is currently...

“Please Be Precise”: Sir Martin Hates Business Models

from paidContent.org

By Rafat Ali - Sun 27 Jan 2008 09:17 PM PST

Sir Martin Sorrell, the CEO of WPP, hates the phrase “business model” and made it very clear at the DLD Conference in Munich, Germany last week. He asked panelists at a video startups panel, rather pointedly (as recounted by Randall Rothenberg, CEO of IAB, on his blog): “If there’s a phrase I loathe, it’s ‘business model…In my company, we have 102,000 people working in 106 countries. Our world is made up of revenues, costs, profits, and cash flow. I’ve heard a lot from this panel on what will be. But we do an enormous amount of business, much of it growing, with broadcast and cable television networks around the world. Can each panelist precisely say what their revenues, profits, and cash flows are today, and what they will be in a few years? Please, be precise.” Unfortunately, almost no one was, write Rothenberg. The panelists, in case you’re curious, were Dina Kaplan, co-founder and COO of Blip.tv; Suranga Chandratillake, CEO of Blinkx; Niklas Zennstrom, co-founder of Joost; and Patrick Walker, head of content strategy and partnerships for YouTube in EMEA.

Sir Martin wrote about this incident on his Davos blog on Telegraph, where he said: “When asked what revenues, costs, profits and cash flow are, few respond coherently. The odds of success are still 1 in a 100, as General Doriot used to say. Sometimes it seems that its sardines for buying and selling, not for eating!”

And talking of self-delusion...

This was posted earlier on the ADVFN bulletin board by 'Jarvis'

"Given all the positive details unearthed by Dig & Gadg which have not yet been put officially into the public domain by way of TU or RNS I get the feeling that there are so many good things bubbling beneath the surface it's almost as if BLNX are waiting/working for a last major piece of the puzzle to fall into place. At that point a TU/RNS could be issued which would embrace all of the above and more. Yes, I know we might all jump to the conclusion that Miva is that piece, but perhaps not. Perhaps they have indeed walked away but are seeing the business develop so quickly that they do not need the added problem of seeking to integate the two businesses whilst managing their own incremental growth. Difficult to put down all of the above without using the word "explosive"!!"

Hmmm, I prefer to only believe what I can actually see, myself. And what we haven't seen from Blinkx management are any announcements concerning the state of play with Miva, or when the company might become profitable. Strange, that... 

Lloyds /HBOS increase their holding...

...from 7.3% to 9.08%, so up 1.78%.

Let's hope they know something we don't, eh? 

With any luck company profitability or a takeover not far away now...

An interesting story of corporate self-delusion and hubris...

...which I'm not suggesting has anything to do with anything, least of all Blinkx, but which I simply archive here as interesting reading, and perhaps a lesson for those who believe that just because someone picks up a knighhood, or some obscure media award, that they therefore become infallible...

Hubris, overarching vanity and how one man's ego brought banking to the brink

A roundup of some (not recent) takeover speculations

Blinkx 'good enough to scare Google' [8 June 2008]

"Blinkx recently outpaced Google Video in Britain, and shares jumped last month with rumours that Google was eyeing the company for takeover"

-----------

Yesterday's trading: Microsoft eyes Blinkx [9 May 2007]

"Doctor Mike Lynch was Britain's first software billionaire. His beloved Autonomy flirted with the Footsie during the dotcom boom before falling dramatically out of bed, along with many other techno high-fliers, when the bubble burst in March 2001.
It took some time for him and the company to recover but the shares have doubled since January 2006. Sold down yesterday to 732½p at the outset, they rallied strongly to touch 827p and close 34½p higher at a 800½p amid rumours that US computer giant Microsoft could bid for its Blinkx consumer division before it gets demerged and floated on Aim later this month."

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Rumors: Yahoo's Free VoIP; Google's Free Web Access; Murdoch's Blinkx Buy [August 18 2005]

"And on Monday, Reuters reported that News Corp. is eyeing an acquisition of search provider Blinkx, citing persons close to Rupert Murdoch's media conglomerate who told the Los Angeles Times, however, that negotiations with Blinkx were not as far along as Murdoch had implied during an earnings conference call with analysts."

-----------

If all those companies wanted Blinkx then, hard to see why they're not still interested now. 32 million hours of video indexed, over 500 partners, Ad Hoc already released and Transaction Hijacking ready to go (and it should have gone before Christmas, in my opinion) - all that and a share price stubbornly stuck at below a third of its IPO price.

C'mon guys - it's clear that Blinkx management doesn't have a clue about delivering shareholder value (by which I mean a strong and growing share price). Someone bid for this company and put shareholders out of their misery? The buyer wins, shareholders win. the only losers would be Mike Lynch and Blinkx management - but since they've shown not the slightest concern for Blinkx shareholders I can't think of a single reason why I shouldn't reciprocate...

Another day, another RNS, another big 'So what?' from shareholders...

So today we get an RNS that Blinkx have signed up Premiere Fitness. Who dey?

Another non-entity signing that is probably going to add tuppence-ha'penny to the Blinkx bottom line.

Blinkx management just don't seem to get it: shareholders don't give a damn about adding another obscure partner - we have hundreds of those already. What shareholders give a damn about is Blinkx management resolving the Miva situation so that we know what the hell is going on.

The Miva situation has dragged on for months now, wrecking Blinkx's share price and showing the Blinkx management team up as totally clueless. Don't they know anything about human nature? What did they think would happen - having offered 120c and been rejected - when they 'revived' the Miva offer at 55c? Did they think Miva management would welcome Blinkx with open arms, after being shown up as cretins for turning down the 120c in the first place?

Utterly clueless - and I'll continue to believe that until and unless Chandratillake and the rest of the Blink 'management' team prove to me otherwise. Precious little sign of that, so far...

Ballmer's regrets...

"Ten years after taking over as Microsoft president - and eight years after replacing Bill Gates as chief exec - Ballmer has told The Wall St Journal that impatience prevented Microsoft from pursuing a Google-like paid search business back in 1999."
http://www.theregister.co.uk/2009/01/16/ballmer_patience_internet/

It's not too late Steve! Buy Blinkx and become the leading video search player in the world! Leapfrog Google!

I reckon any serious purchaser could get Blinkx for around 60p a share. Those investors that got in at the IPO at 45p - I bet most of their other investments are totally underwater. If Microsoft (or Google, or Yahoo - or indeed Rupert Murdoch) offered them a chance to crystallise a c30% gain after only 18 months they'd jump at the chance. Sure they might get more if they held on longer - but it's an uncertain world so then again they may not. The - apparently - amateur, bungling way that Blinkx has handled the Miva approach shows that the Blinkx management team aren't quite as Godlike as their more ardent cheerleaders would have us believe: it is by no means guaranteed that Blinkx are going to make it to mega-profitability.

In the current environment cash is king - cash now as opposed to maybe more cash in the future. Mr Ballmer should reflect on that...

The Times, Saturday January 17th 2009

Record of investment in AIM is dire, says LBS

The long-term record of investing in AIM has been dire, according to a study from London Business School (LBS), which says that London's junior stock market is now "in a very critical state". The annual Hoare Govett Smaller Companies report, co-published by the LBS, shows that £1 invested in the AIM all-share index at launch 12 years ago would now be worth only 40p. 

From New Media Age 15th Jan 2009 - UK online ad spend

From New Media Age 15th Jan 2009

Web TV firms in fresh bid to stall Kangaroo

Internet TV companies Joost and Babelgum have made fresh calls to the Competition Commission to stop Kangaroo, the BBC Worldwide, ITV and Channel 4 joint-venture VoD service. The move is in response to the CC's preliminary conclusion last last year that Kangaroo would likely result in a 'substantial lessening of competition'. Joost and Babelgum have challenged the joint venture throughout the CC's inquiry, whose final decision is due next month.

From New Media Age 15th Jan 2009

letter to John McFall MP about shorting

13th January 2009

Mr John McFall MP,
The House of Commons,
Westminster,
London SW1A 0AA

Dear Mr McFall.
I read in the press over the weekend that you will be chairing the Commons Treasury committee when it questions hedge fund managers later this month.

I further understand that you are opposed to the proposed lifting of the ban by the FSA on the short-selling of financial institution stocks.

However, I would ask a wider question: why is shorting of any stock allowed?

The traditional answer from those who conduct short-selling is that the practise provides liquidity to the markets. But I’m afraid I find such an explanation unconvincing, self-serving and disingenuous. It is the price mechanism which should provide liquidity, according to the simple laws of supply and demand.

If a share is illiquid (ie those that hold the stock do not wish to sell it) then the laws of supply and demand suggest that if there is a demand for those shares the price should rise until some of those holding the stock are persuaded to sell.

Similarly if shareholders lose confidence in a company’s prospects or in a company’s management team they will sell the stock, and the price will drop until it finds a level at which it looks like good value when it will be bought.

These processes are easily understood. And yet short-selling subverts these mechanisms by allowing hedge funds and others to borrow stock (or, in the case of naked shorting, not even that) to sell.

Let me ask you this, Mr McFall – when else in life can someone sell what they do not own? Quite rightly I cannot sell your house because I do not own it. I cannot sell my friend’s car because I do not own that either. And yet short-sellers can and do sell what they do not own.

Far from creating liquidity to help the markets such a practise actually distorts the markets by warping the normal processes of supply and demand. It is precisely these kind of warped, exotic business practises which have flown the global economy into the side of a mountain and landed us where we are now.

To listen to those who defend hedge funds one would think that such funds sell a stock short and hope for the price to drop. In fact they sell shares in a company – and keep selling – until the price drops. Can you imagine these Masters of the Universe leaving such a thing to chance?

There are many, many companies where double-digit percentages of the shares are ‘on loan’ and being used for shorting. Shorting, by definition, involves falling share prices, thereby harming small investors – and pensioners not least. What kind of Labour government is it which puts the interests of obscenely wealthy hedge fund managers over those of people who have diligently (dare one say ‘prudently’?) saved into a pension all their lives. How would you feel, Mr McFall, if you were recently retired and forced to cash in your pension and buy an annuity with the markets tanked as a result of the bad bets and reckless lending decisions of City whizzkids?

I hope you give the hedgies a very rough time of it indeed later this month. I further hope that the government will legislate to end the practise of short-selling. You may find that nearer the next election your party needs a boost in the polls. Banning short-selling across the board, the accompanying stock market rally and improvements in people’s pension prospects, and the pain and bankruptcy of many hedge funds could prove to be just what labour needs.

Yours sincerely,

from the Evening Standard, 12th January 2009, page 34

'Nothing like moving with the times. So full marks to public relations outfit Financial Dynamics which claims to have set up Europe's first "restructuring and recapitalisation communications consultancy". FD says it has loads of experience, having acted for Northern Rock after it was nationalised, spun on RBS's rights issue and part-nationalisation, and dealt with MFI's administration. Joint chief of the unit will be Giles Sanderson. Older heads will remember that when FD led the way in floating hi-tech companies in the later years of the last century, Sanderson had the dubious pleasure of heading its dot-com unit. What happened to that?'

letter to Jerry Yang of Yahoo, 12th January 2009

Jerry Yang, CEO,

Yahoo Inc,

701 1st Avenue 
Sunnyvale, CA 94089

Dear Mr Yang

I have read with concern and sympathy recent news about Yahoo’s travails. I’ve been using the web since 1994 and working in the new media industry since 1995, and during that time Yahoo has been an iconic brand representing all that is best about the internet. It is a great shame to see the company in difficulty.

From where I’m standing it looks very much as though Yahoo needs a clear raison d’etre and way forward before it can get its mojo back. It has the services, users and eyeballs but it seems to me that Yahoo doesn’t have anything obvious to do with them or any obvious way to monetize them.

I have a suggestion for you, Mr Yang.

I am a shareholder in Blinkx, the self-described “world’s largest and most advanced video search engine”. As I am sure you are aware, Blinkx was spun out of  Autonomy some 18 months ago and since then has released a raft of video search-related products including Ad Hoc and the new un-roll feature announced recently. The company has also indexed in excess of 32 million hours of online video, including content from major partners such as MSN UK.

Sadly Blinkx’s technical delivery has not been matched by a delivery of shareholder value. I have been a shareholder for over a year now, and have seen the value of my investment decrease significantly.

Of course global stock markets have had a torrid time of it, and Blinkx management has blamed general conditions for the decline in their stock price. I’m afraid however that I don’t quite buy that. I believe that the inexperience of the senior management team – and the CEO Suranga Chandratillake not least – has been largely responsible for the share price decline. For example, Blinkx has been trying to execute a takeover of Miva, and has in my view – and that of many other shareholders – botched the process very badly. Blinkx made an initial approach at 120c which was rejected, and then some time later delivered a letter to the Miva board ‘reviving’ the offer at 55c. Since when Blinkx shareholders have been kept totally in the dark about whether the offer has been accepted or rejected (indeed, there is even some doubt about whether a second formal offer exists at all).

The ensuing uncertainty is, I believe, what has caused the Blinkx share price to decline to its current parlous state of c13.5p.

This has, however, created a great opportunity for any large technology company looking to acquire a video search engine business.

I am suggesting that Yahoo should launch a takeover bid for Blinkx. I cannot be the only shareholder despairing of management’s ability to deliver shareholder value (by which I mean a strong and growing share price). Blinkx’s IPO price was 45p – the 9 major shareholders who bought into that IPO have seen 65%+ wiped from the value of their investment in only 18 months – and this for a company that claims to lead the world in a red-hot market sector. In the current uncertain market conditions I’m sure these large shareholders would entertain an offer of 50-60p.

Blinkx’s video search technologies coupled with Yahoo’s users and traffic would be a phenomenally powerful – and highly lucrative - combination and could catapult Yahoo back into the premier league of internet companies. Also, Yahoo’s position and reputation could facilitate many deals with third parties (Blinkx currently has 400+ partners large and small and while impressive that is barely scratching the surface) leading to further revenue and a strengthening of Yahoo’s position.

I strongly suggest you look more closely at Blinkx. The company’s management seems to have badly taken its eye off the ball which creates a unique opportunity for you. I would urge you to take it.

Yours sincerely,

letter to Steven A Ballmer of Microsoft, 12th January 2009

Mr. Steven A. Ballmer, CEO,

Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-7329
USA

Dear Mr Ballmer

Some time ago now, I read of an incident where one of your employees told you they were leaving to go to Google, and you are reported to have become upset and stated that you were going to “fucking kill Google”. I further read with interest your recent comments from CES about Microsoft’s ambitions in the area of TV search.

If it is still your intention to kill Google, and if you want Microsoft to establish a dominant position in TV search, there is one company you should take a look at which would achieve both those strategic aims.

I am a shareholder in Blinkx, the self-described “world’s largest and most advanced video search engine”. As perhaps you are aware, Blinkx was spun out of  Autonomy some 18 months ago and since then has released a raft of video search-related and advertising products, including Ad Hoc and the new un-roll feature announced recently. The company has also indexed in excess of 32 million hours of online video, including content from major partners such as MSN UK.

Sadly Blinkx’s technical delivery has not been matched by a delivery of shareholder value. I have been a shareholder for over a year now, and have seen the value of my investment decrease significantly.

Of course global stock markets have had a torrid time of it, and Blinkx management has blamed general conditions for the decline in their stock price. I’m afraid however that I don’t quite buy that. I believe that the inexperience of the senior management team – and the CEO Suranga Chandratillake not least – has been largely responsible for the share price decline. For example, Blinkx has been trying to execute a takeover of Miva, and has in my view – and that of many other shareholders – botched the process very badly. Blinkx made an initial approach at 120c which was rejected, and then some time later delivered a letter to the Miva board ‘reviving’ the offer at 55c. Since when Blinkx shareholders have been kept totally in the dark about whether the offer has been accepted or rejected (indeed, there is even some doubt about whether a second formal offer exists at all).

The ensuing uncertainty is, I believe, what has caused the Blinkx share price to decline to its current parlous state of c13.5p.

This has, however, created a great opportunity for any large technology company looking to acquire a video search enhine/advertising business. I am suggesting that a takeover of Blinkx by Microsoft would benefit your company enormously.

I cannot be the only shareholder despairing of management’s ability to deliver shareholder value (by which I mean a strong and growing share price). Blinkx’s IPO price was 45p – the 9 major shareholders who bought into that IPO have seen 65%+ wiped from the value of their investment in only 18 months – and this for a company that claims to lead the world in a red-hot market sector. In the current uncertain market conditions I’m sure these large shareholders would entertain an offer of 50-60p – which would, if successful, allow Microsoft to quickly vault into the premiere league of video search and go toe-to-toe with Google.

Don’t take my word for it Mr Ballmer. Talk to Ashley Highfield, who has had dealings with Blinkx both in his role at the BBC and afterwards at Kangaroo before recently leaving that organisation to join Microsoft. I believe he would confirm that Blinkx’s technology would be a massive asset to Microsoft’s search ambitions, and due to the current depressed Blinkx share price would be achievable at a very reasonable price.

Yours sincerely

letter to Eric Schmidt of Google - 12th January 2009

Eric Schmidt, Chairman and Chief Executive Officer,

Google Inc,

1600 Amphitheatre Parkway

Mountain View, CA 94043

 

Dear Mr Schmidt.

Like many consumers, I love YouTube and use it all the time for many reasons. It is one of the wonders of the age.

 However, I believe I am correct in saying that Google as a company has so far failed to monetize YouTube, to the point where offering the service is a major drain on Google’s resources.

There is a company which I believe could solve these problems for Google.

I am a shareholder in Blinkx, the self-described “world’s largest and most advanced video search engine”. As I am sure you are aware, Blinkx was spun out of  Autonomy some 18 months ago and since then has released a raft of video search-related products including Ad Hoc and the new un-roll feature announced recently. The company has also indexed in excess of 32 million hours of online video, including content from major partners such as MSN UK.

Sadly Blinkx’s technical delivery has not been matched by a delivery of shareholder value. I have been a shareholder for over a year now, and have seen the value of my investment decrease significantly.

Of course global stock markets have had a torrid time of it, and Blinkx management has blamed general conditions for the decline in their stock price. I’m afraid however that I don’t quite buy that. I believe that the inexperience of the senior management team – and the CEO Suranga Chandratillake not least – has been largely responsible for the share price decline. For example, Blinkx has been trying to execute a takeover of Miva, and has in my view – and that of many other shareholders – botched the process very badly. Blinkx made an initial approach at 120c which was rejected, and then some time later delivered a letter to the Miva board ‘reviving’ the offer at 55c. Since when Blinkx shareholders have been kept totally in the dark about whether the offer has been accepted or rejected (indeed, there is even some doubt about whether a second formal offer exists at all).

The ensuing uncertainty is, I believe, what has caused the Blinkx share price to decline to its current parlous state of c13.5p.

The current situation does, however, present a great opportunity for Google. I am suggesting that Google should launch a takeover bid for Blinkx. I believe such a takeover would offer the following strategic advantages to Google:

 

·         Google would further cement its leading position in online video. It would not only have the hundreds of millions of hours of UGC video on YouTube, it would acquire the Blinkx indexes to 32 million hours (and growing) of professionally-produced video. That figure of 32 million hours represents, I believe, approximately two-thirds of all such video on the web.

·         Blinkx technology could automatically index YouTube videos to place contextual ads against or within them (pre-roll, un-roll etc): it could also automatically index UGC videos as they are uploaded (I believe I am correct in saying that 8 hours of video are uploaded to YouTube every minute – manually indexing such a volume is impossible)   

 I cannot be the only Blinkx shareholder despairing of management’s ability to deliver shareholder value (by which I mean a strong and growing share price). Blinkx’s IPO price was 45p – the 9 major shareholders who bought into that IPO have seen 65%+ wiped from the value of their investment in only 18 months – and this for a company that claims to lead the world in a red-hot market sector. In the current uncertain market conditions I’m sure these large shareholders would entertain an offer of 50-60p. If successful it would be the deal of the century for Google, and could provide you with unassailable lead in online video.

Yours sincerely 

Five questions for Blinkx management to answer

1/ if the company has such a bright future, why is not the company itself or its officers buying shares at current prices which are, after all, around 25% of the price they charged investors at the IPO?

2/ just what exactly is the situation with Miva? why have blinkx not given a firm date for acceptance of rejection of their offer (if indeed a formal offer exists)? why are they so determined to appear amateur and create uncertainty around blinkx's position and its management's competence?

3/ why do they not RNS significant news/deals (like Utarget.Fox), and instead we get meaningless RNSs like 'Christmas is coming'

4/ why ask for authority to conduct a share buyback and then not actually perform one?

5/ given the obvious potential that blinkx has, and the constant stream of announcements of apparently very positive news such as un-roll, why isn't anybody in the market buying blinkx? don't they know what we know? or what do they know that we don't?...

email to Suranga Chandratillake 3rd December 2008

Dear Mr Chandratillake

I’m very disappointed that you haven’t seen fit to respond to the email I sent you ten days or more ago. I believe I raised in that email very legitimate concerns about company strategy and not least about the impact which that strategy (or, as I see it, lack of strategy) was and is having on the company’s share price. 

Since my last email, the company’s share price has continued to decline. Very recently it reached  historic lows. 

I repeat my sentiment from my last email - that of course I am not unaware of the situation in global markets , but I do not hold shares in global markets, I hold shares in Blinkx: and I expect the management of a company in which I have invested to protect my investment, not to stand by while the value of that investment is destroyed by speculators without doing the slightest thing about it.

There are to date still around 24m or 25m Blinkx shares (circa 10% of the issued share capital) out on loan being used for shorting. Blinkx company management has not, so far as I am aware, undertaken any actions to try and curtail this situation. At the last AGM Blinkx management requested – and was granted – authority to conduct a share buyback: it has so far seen fit not to exercise this authority, in spite of the fact that such a buyback would almost certainly encourage the shorts to close and the share price to rise concomitantly. 

I believe I am correct in saying, Mr Chandratillake, that you do not own a single Blinkx share. So you do not actually have the faintest idea of the pain which Blinkx shareholders are going through, seeing the value of their investments eroded day by day, week by week while management apparently stands idly by doing nothing? 

I, however, do not intend to stand idly by. I am entirely sure that you are a maven with the technology which drives the Blinkx products, but I am afraid I have grave doubts about your ability to lead a company such as Blinkx through the difficult early years of growth. You have already conclusively proved, to my satisfaction, an inability in the area of investor relations, and I’m afraid that I find your public performances hesitant and unconvincing.

Should the Miva takeover fall through, and should Blinkx then fail to undertake a share buyback to support the share price, I think you should consider your position and make way for someone who can focus obsessively on delivering shareholder value – by which I mean a strong and growing share price.

Such a strong and growing share price would, I believe, achieve many tactical objectives:

1/ A strong share price deters spurious predators

2/ With a strong share price stock can be used as currency in takeovers

3/ In the current uncertain markets, a strong share price might highlight Blinkx as a strongly-growing safe haven for investor funds during a period of turbulence

4/ A strong share price guarantees happy, supportive shareholders instead of critical, fractious shareholders

I have no doubt that there is enormous shareholder value within Blinkx – but I am afraid I no longer have confidence that you are the leader to unlock that value. That is why I will not be selling my shares and moving on, but will instead be seeking to replace you.

I will wait until the New Year. If by that time there is no resolution to the Miva situation, and/or the company has not announced a share buyback, and/or the share price has nor started heading back in the right direction, I will be emailing you again. But the next time, I will be BCCing my email to a dozen or more financial journalists whose addresses I keep specifically for the purpose of holding to account company executives who think they are above the concerns of private shareholders.

Should it be necessary to contact you again, I will coincide my next email with hard copy letters to the major institutional investors seeking their support to remove you and replace you with a new CEO who is willing to personally invest in the company and focus on shareholder value. Many large institutional investors who bought in at the IPO have seen more than two-thirds (very nearly three-quarters) of their investments wiped out. I shouldn’t imagine that they’re too pleased with that, what with Blinkx being the third-largest video search engine in America and being the self-styled world’s largest, fastest-growing video search engine and all. You would probably say that your strategy will deliver in the long term. As Maynard Keynes pointed out: in the long term we’re all dead.  We need to see progress now.  

As a small private investor communicating with large corporate and institutional investors I have no illusions as to the effect I will achieve with such emails and letters: initially none whatsoever. However, the principle of a drop of water on a block of stone has served Amnesty International well to date and it is one I intend to adopt. By the second or third (or fourth or fifth or sixth…) round of emails and letters – each of which will have followed yet another period of an eroding Blinkx share price and non-delivery of shareholder value by company management – perhaps they will be ready to take notice. Perhaps they will begin to ask themselves why such a fast-growing company in such a red-hot sector has a management team so fundamentally unwilling to support its own share price by word or by deed.

If shareholder value cannot be unlocked then the company should be put up for sale to the highest bidder: I’m sure that one or more of Microsoft, Yahoo, Google or News Corp (and I’m sure that list could be extended to include WPP, Barry Diller and many others) would be willing to offer a - perhaps significant - premium to the IPO price.

You are running out of time Mr Chandratillake. In fact you’ve already run out. You’d better start delivering for shareholders, and soon.

email to Suranga Chandratillake 13th November 2008

Dear Mr Chandratillake

I am a Blinkx shareholder of more than a year's standing, and I own around 200k shares.

 

I am writing to you today because like all investors in Blinkx I am amazed, concerned and angry at the seemingly-relentless decline in the company's share price and the lack of any effort by company management to support the share price or to even make an attempt to arrest the slide. 

 

Of course I am aware that global markets are in a very febrile state, but the fact remains that Blinkx is - or so it claims - the world's largest, fastest-growing video search engine: a red-hot company in a red-hot sector, growing very fast (as Monday's figures showed) and yet one which is still failing to deliver shareholder value in the form of a rising - or even stable - share price. 

 

I would make the following specific points:

 

1/ Just under 10% of the company's shares (around 24m in total) are 'out on loan' and almost certainly being used for shorting. Why is Blinkx and its Nomads not putting pressure on Blinkx's market makers to cease or reign in this practice?

 

2/ At the AGM the company sought - and was granted - authority to conduct a share buyback. Why has this not commenced? Do you feel that the current share price still overvalues Blinkx and you are waiting for it to fall further? And if that is the case, was it not disingenuous at best (and fraudulent at worst) to sell shares at the IPO at a price much more than double the current share price? Either you think the IPO price represented fair value for Blinkx shares - in which case the current share price must appear a bargain and the company should be buying back its own shares - or the current share price is a fair reflection of the company's value, in which case company management has hard questions to answer about the pricing of the IPO. Which is it? Of course a share buyback would do much to resolve the problem described in point 1 above. I'm very curious as to why the company should ask for authority to conduct a share buyback and then not actually conduct one? 

 

3/ Given the current level of the share price, and the fact that we are no longer in a closed period before results, why are not officers of Blinkx themselves buying shares in the market? If Blinkx management - the people who know the company best - do not have enough faith in the company to spend their own money on shares, why should anyone else? Share purchases by senior executives of the company would send a very clear signal to the markets. 

 

A low share price makes a takeover by a potential predator (Microsoft, Google, Yahoo, News Corp and, I'm sure, many others) ever more likely: and that would not be to the advantage of any shareholder - or, indeed, those who only have share options in the company and have not actually bought even a single share with their own money.

 

I would urge you to take immediate action to deal with the above points. If you don't, I'm afraid shareholder dissatisfaction may bubble over into more vocal and dramatic action.

 

I look forward to your responses on these points. 

 

Yours sincerely,