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.
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