Speculative Buy: blinkx
Sector: Software & Computer Services
Market Cap: £82.6m
Forecast P/E: n/a
Video search engine company blinkx narrowed its losses in the year to March to US$8.9m (£6.2m), as revenue surged up from $13.9m to $33.6m.
Founder and CEO Suranga Chandratillake was ebullient following the results, telling Growth Company Investor that ‘together with a 140% increase in revenue, the [swing to] positive EBITDA figures has reduced our risk’.
blinkx, floated on AIM in 2007 with a £25m funding at 45p, enables users of its site to search across a variety of video-hosting websites such as YouTube, MySpace and Metacafe. In fact, Chandratillake describes blinkx as being ‘like a remote control for online TV’.
He believes that blinkx, with $14.6m cash, is poised for great things as the large video content market develops, arguing, ‘There is no market with more potential than online video advertising. Advertising budgets are going to shift from television to online content’.
Broker Piper Jaffray predicts that revenues should grow by 33% to $40.1m in the year to March 2011, although blinkx is not forecast to make a profit until 2012, when analysts see a pre-tax $2.9m as achievable.
While blinkx is operating in a highly competitive environment in which it is seeking to win market share from established names such as YouTube and Google, we think the shares represent a risky, but potentially hugely rewarding punt.