Profits tumble at Blinkx

By Malar Velaigam, 18 May 2012

Rising costs largely explain the slump in pre-tax profits at video search engine group, Blinkx – as competition in the online advertising market continued to intensify. Management failed to provide any guidance on current trading, or on the full-year outlook – leaving little scope for share price upside.

With competition ramping-up, Blinkx's sales and marketing costs rose to $32.5m (£21m) from last year's $24.4m. There were also exceptional costs, totalling $4.7m, from last year’s acquisitions of online media and technology business, Burst, and online advertising company, Prime Visibility Media Group (PVMG). What’s more, margins at those two businesses are lower than at Blinkx’s legacy operations – meaning that the group’s gross margin slipped to 53 per cent from 65 per cent.

Still, the online video advertising market is still expected to grow at 30 per cent a year, yet Blinkx exploits less than 10 per cent of the total advertising interactions across its footprint – suggesting plenty of growth potential. Burst and PVMG are eventually expected to help the group tap into that potential.
Broker Canaccord Genuity expects cash profits of $16.2m in 2013, giving EPS of 2.1¢ (2012: $10.5m/2.3 ¢).

from Investors Chronicle

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 Pretty good summary, I thought. So the legacy business with higher margins has stopped growing (evident last November, beyond doubt now), and Burst and PVMG are going to take time to deliver, if they do so at all...

What a total fucking shambles. If only the clueless management team walked it like they talk it - but then again if talking got the job done they'd have delivered a long long time ago...