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