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?

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"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