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blinkx starts on a high

The spun-off consumer arm of UK-based Autonomy started trading this morning on the London Stock Exchange AIM, 11 pence over its placing price of 45 pence, which itself was at the top of its predicted share value, and gave the new company an initial market capitalisation of £125 million.

Comment: Internet video search has become a very hot topic because of the potential associated advertising revenues that can be made. eMarketer predicts $36 billion annual revenues for online advertising within the next four years. The potential of the video element was most clearly demonstrated by Google’s acquisition of YouTube for $1.65 billion. As reported in EVD on 25 April 2007, the differentiator for the new company is that Autonomy’s IDOL technology in Blinkx, will not only allow adverts to be linked to tags on videos, but to the physical content of the images displayed, such as a car or even a pair of sunglasses.

Mike Lynch Autonomy’s CEO will retain an 8.7% shareholding in Blinkx and act as a non-executive director. Autonomy itself will have a 10% shareholding. Whilst they started trading at 56 pence, at time of writing (09:30 BST) Blinkx shares were being sold at 63.55 pence, having at one point risen as high as 67 pence. Not an insignificant premium, although Autonomy shares were down 3.79% at 777.4 pence.

There are large sums of money being staked in the Internet advertising arena, as exemplified first by Google’s proposed acquisition of DoubleClick, the rumoured but abortive tie-up between Yahoo! and Microsoft, and latterly by this weeks $6 billion bid by Microsoft for aQuantive.

Given this context, Suranga Chandratillake, Blinkx CEO may find that he has to concentrate more on the outside interest in the company than the business going forward.