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From Revolution magazine's Digital Marketing supplement, November 2009
Friday, 6 November 2009
Letter to Steve Ballmer, CEO of Microsoft
6th November, 2009
Mr. Steven A. Ballmer, CEO,
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-7329
USA
Re: Blinkx
Dear Mr Ballmer
You may recall that I have written to you a couple of times now regarding Blinkx.
Blinkx, as you may be aware, has just released interim figures showing that revenues have doubled again in the past six months - and although costs have also gone up, we are assured by management that they have now levelled off. The company claims still to be on target for profitability in full-year 2010.
Unfortunately, due to the fact that management doesn’t seem to think that the markets or shareholders have a right to know anything about anything – and in particular has refused to release any details about the recent takeover of Zango – the share price is still languishing and many shareholders are very angry indeed about being kept in the dark.
Which is of course why I’m writing to you today – I am one of those very disgruntled shareholders.
I continue to believe that a takeover of Blinkx remains the best chance for shareholders to see a return on their investment, and it still seems to me that one of the very large tech/media companies (Microsoft, Google, Yahoo, News Corp etc) could best and most profitably leverage Blinkx’s technologies.
Autonomy seems to agree with me, as they have just taken part in a share placing to take their holding in Blinkx to around 26%. I see this purely as a defensive move (Blinkx has a £50m line of credit on tap from Autonomy – instead they chose to place shares with institutions including Autonomy). However, I would suggest that the very reason Autonomy (and Mike Lynch, who has a near-10% personal holding in Blinkx) do not want to see Blinkx taken over is the very same reason why a company like Microsoft would want to take it over: it is growing very fast, and yet its management - in my view – lacks credibility with investors and the markets and so this massive growth is not yet reflected in the company’s share price or Market cap.
The management seems either to be missing no-brainer opportunities to monetise their index of 35m+ hours of video (no iPhone app, I notice, nor any plans for one as far as shareholders are aware), or lacks the deal-making clout to cut such deals (where is the deal with an organisation like Yahoo!, to get that index in front of hundreds of millions of eyeballs and share the monetisation revenues?)
But while Blinkx’s management team seems to lack the experience and gravitas to cut deals like that, you could, couldn’t you Mr Ballmer? Especially given your recently tightening of relations with Yahoo…
Perhaps if Mr Chandratillake, as CEO, put his money where his mouth is and bought some shares in his own company then investors and the markets might feel differently, but regrettably to date that has not happened. To my mind he seems to imagine he is running an Autonomy R&D department, not a company with shareholders to whom he has responsibilities. He has had more than 2 years now to persuade me that he knows what he is doing and will return value to me on my investment – I’m afraid I no longer have any faith whatsoever that he can or will do so.
I would strongly recommend you take a very close look at Blinkx, Mr Ballmer. You may need to buy Autonomy as well to get a hold of it, but I’m sure you could always sell on the rump Autonomy business (Oracle and SAP come to mind as obvious potentially interested parties) once you’ve carved out the video-search-related patents and other IP. Buying Blinkx would very significantly close the gap between Microsoft and Google in search – if not eradicate it all together.
Yours sincerely,
letter to Carol Bartz, CEO of Yahoo! Inc
Carol Bartz, CEO,
Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
United States of America
6th November 2009
Dear Ms Bartz
It’s good to see that Yahoo is starting to recover its former position as a leading internet property – and I think the ad campaign you are running in the UK at the moment is very effective. I hope the deal with Microsoft will provide some revenue stability from which to re-commence the growth of the company.
In order to grow revenues, it might be worth thinking about making some strategic acquisitions.
If that were to be considered, could I suggest Blinkx?
It has just released interim figures showing that revenues have doubled again, and that although costs have also gone up we are assured by management that costs have now levelled off. The company claims still to be on target for profitability in full-year 2010.
Unfortunately, due to the fact that management doesn’t seem to think that the markets or shareholders have a right to know anything about anything – and in particular has refused to release any details about the recent takeover of Zango – the share price is still languishing and many shareholders are very angry indeed about being kept in the dark.
Which is of course why I’m writing to you today – I am one of those very disgruntled shareholders. I have held shares in Blinkx for more than 2 years, but frankly have given up hope of ever seeing the return on my investment which I hoped for when I invested. My own view of the company is that while they have fantastic technology – and technologists – the management team are too concerned with technology for its own sake and completely ignore their responsibilities to shareholders.
However, Blinkx’s technology would make a perfect fit for Yahoo. If you were to put their index of 35m+ hours of professional, longform video with Yahoo’s hundreds of millions of users and monetise the results, it would add up to a very substantial revenue stream.
Again, rolling out their SmartShopper technology to those hundreds of millions of users, and sharing the results with a browser manufacturer, would create another substantial revenue stream.
And all this is to say nothing about their other technologies such as Ad Hoc and Transaction Hijacking: Blinkx can best be summarised as having fantastic technology but, in my view, lousy management. The best hope for shareholders is to see a takeover of the company by a large media organisation which can best leverage their technologies into an existing user base.
Such a deal would be good for the media organisation which took such a risk and good for shareholders of Blinkx for whom a takeover seems to be the best (and perhaps only) chance of seeing a return on their investment.
Such a takeover would not, of course, be good for the management of Blinkx – but since they’ve never given any impression of caring about their shareholders, I for one will not be losing any sleep over them. They’ve never even demonstrated their confidence in the company’s future and their own future delivery of value by buying any shares in their own company – absolutely shameful, if you ask me.
So take a look at Blinkx, Ms Bartz – ansd you may conclude, as I have, that it would be a near perfect fit for Yahoo! – and with a market cap of £55m, very cheap too. The market cap would probably be higher, in my view, if the company’s management had not repeatedly damaged their credibility with investors and the markets – but what has been their loss could be Yahoo!’s gain.
Yours sincerely,
Hulu iPhone App Coming Soon, 'Badass'
"Hulu is in the process of developing an app for Apple's (AAPL) iPhone and iPod touch, we have learned from a plugged-in industry executive. The app is coming soon (within a few months) and is "badass" -- as excellent as Hulu's Web site. Video will work over both wi-fi and 3G, we're told..."
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Comment: So Hulu think it's a good idea - but Blinkx don't. Go figure...
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