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,
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