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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Burst Med Reg S | BRST | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
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|---|---|---|---|---|
| 0.00 | 0.00% | 31.25 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 31.25 | 31.25 |
| Top Posts |
|---|
Posted at 07/8/2009 14:43 by charlie 5 August 2009 Written by: Alistair Blair Burst Media, a US company that sells banner advertising on behalf of 5,000 websites, arrived on Aim three years ago with a good record. Sales had tripled in the previous three years and net income had risen from minus $1.3m to plus $3.4m. A further 60 per cent advance in earnings was due to be reported by the end of the year. The company priced itself at 26 times historic earnings and placed 56 per cent of its shares at 82p, raising £35m from blue-chip institutions. There were a few negative factors. Why did such a successful company choose to list in London instead of its home market? The venture capital backers were selling out lock, stock and barrel. And as the prospectus spelt out in laborious detail, the fact that Burst was incorporated in Maryland meant it was not obliged to respect several normal protections for UK investors, including the Takeover Code. Perhaps to assuage such concerns, Burst had recruited a very august figure as non-executive chairman, namely David Hanger, previously chief executive of The Economist magazine. The upbeat mood lasted five months. In September 2006, Burst confessed sales growth had slowed from 50 per cent to 11 per cent and earnings would shrink by a third. The shares collapsed to 25p. A few months later Burst said it was back on track and "looking forward to a good 2007". It was not to be. In 2007, sales grew only 14 per cent; in 2008, by 1 per cent. Net income was back in the red. The comparison with soaring internet activity was stark. Last December, Burst's network reached 113m US internet users, up 40 per cent in a year. The shares spent most of last winter below 4p, improving to 6p after Burst dipped into its $10m cash pile to buy 12m shares. Burst's cash, which has stayed pretty steady since the flotation, is worth over 7p a share. Thus, the market attributes a negligible or even negative value to the business itself. Last week it emerged that one of Burst's rivals, Cyberplex - a Canadian company - has had an offer on the Burst's boardroom table since last November. Three months ago, just as Burst was conducting its latest share buy-back programme at 5.9p, Cyberplex increased its offer to 12p a share in cash. Cyberplex has written support for its offer (in the form of proxies) from major shareholders holding 40 per cent of Burst. Cyberplex seems to be the company Burst's shareholders hoped they were investing in, back in 2006. Last year, almost entirely via organic growth, its sales quadrupled to $60m. In the first quarter of this year, sales quadrupled. Profits are in a similar groove. Its shares have risen 300 per cent since last November. If its initial share and cash offer had succeeded, Burst's shareholders would have gained handsomely. Meanwhile, Burst's media division reported "a general slowdown in ad spending" and flat sales for the first half of 2009. The reason Cyberplex has not made its offer directly to Burst's shareholders lies in the Maryland General Corporation Law, which contains the remarkable provision that if anyone buys a majority interest in a company, they can't vote their shares without the say so of two-thirds of the minority shares. Since Burst's founder, chief executive Jarvis Coffin and fellow executive director David Stein own 28 per cent of Burst and oppose Cyberplex, the offer is going nowhere until they come out of their bunkers. It must be testing for David Hanger, especially as he may be seen at giving a talk on the role of non-executive directors. He explains how this involves "acting in a way that shareholders would want the company to go... that's how you have to behave... this can make it extremely awkward when a management sees their life as being in the company and a predator comes along who will create value for the shareholders..." No doubt Mr Hanger will in due course resolve this awkwardness, perhaps by utilising another unusual aspect of Burst's governance procedures, which give him the unfettered right to call an extraordinary general meeting of the company. At such a meeting, messrs Coffin and Stein could explain why they believe the company is worth more than the Cyberplex offer. This is surely the "the way that shareholders would want to go" and, moreover, the very least they are entitled to. Cyberplex's second-quarter results are due out as we go to press. If they're anything like the first quarter's, the pressure in the Burst boardroom will surely pass a critical point. |
Posted at 16/1/2007 11:46 by masurenguy Well I think that your point in #188 is still valid. Why would they want to withhold this information unless there were some negative factors. Management credibility is still a big issue here following the profit warning so soon after their IPO and therefore they should want to be as transparent as possible in order to regain both existing and prospective investor confidence. |
Posted at 10/1/2007 16:49 by shooting_star I managed to talk with Bill today - an interesting distraction for me from updating my CV!Below are some notes I jotted down under questions I had. Bill wasn't necessarily hugely forthcoming with information but my take is that the forthcoming trading statement should be fine, the problems of the past are fixable and stock should go up as credibility is restored. There is a lot of opportunity here! -did you produce a hardcopy interim results report with full disclosures or did you simply issue your Interim Results via RNS? THEY ONLY ISSUED AN RNS AND DIDN'T PRODUCE A HARDCOPY INTERIM REPORT -can you provide any update on trading since the H1 numbers. (are you still happy with Revenue of c$24m for year to end Dec '06 and EBITDA ex stock compensation of c.$2.4m EBITDA as indicated at the time of the H1 results) NO UPDATE BUT BOARD WOULD HAVE ISSUED SOMEHING IF IT HAD REASON TO BELIEVE NUMBERS ARE "SIGNIFICANTLY" DIFFERENT. WHEN I SAID DOES SIGNIFICANTLY MEAN 10% IN EITHER DIRECTION, BILL COULDN'T SAY IF 10% IS THEIR DEFINITION OF SIGNIFICANT. -From my searches on the internet regarding your company I notice that you appear to have won a contract with HSBC (their "Your Point of View" Initiative) towards the start of December (see link below). Clearly HSBC are a big company -can you say how material this contract win was? CANT COMMENT ON SIZE OF HSBC CONTRACT. THERE ARE OFTEN NON-DISCLOSURE CLAUSES WRITTEN INTO AGREEMENTS. WOULD TEND NOT TO RELEASE RNS STATEMENTS ON ADVERTSIERS BUT WOULD RELEASE SIGNIFICANT PUBLISHER CONTRACTS E.G. TAKODA -can you say anything about other large customers you are targetting/have in your sales pipeline? CAN'T COMMENT ALTHOUGH MENETIONED THAT BIG COMPANIES LIKE GENERAL MOTORS AND PROCTER & GAMBLE ARE STILL VERY EARLY IN THEIR INTERNET ADVERTSING PLANS. IN THE OFFLINE WORLD 80% OF THE AD SPEND FOR THESE COMPANIES IS IN LIFESTYLE SECTOR E.G. THEY SPONSOR EVENTS OUTSIDE OF THEIR SPHERE LIKE GOLF. IN THE INTERNET WORLD ADVERTSING IS STILL VERY END MARKET FOCUSSED E.G. GM ONLY ADVERTISE ON YAHOO MOTORS -is it likely that you will release a trading statement before FY numbers? Do you have any date in mind for when such a trading statement might happen and when FY numbers might come out? TRADING STATEMENT LIKELY IN NEXT COUPLE OF WEEKS AUDITORS WILL VISIT THE COMPANY IN FEB FY NUMBERS SHOULD BE OUT IN MARCH -Do you compete at all in the mobile marketing world with companies such as MediaBurst in the UK ? THEY ARE NOT IN THIS MARKET IN ANY SHAPE OR FORM -Which industry events will be BUSRT be attending in near future. Are any in the UK ? Can you say anything about winning specific business in the UK ? THEY WILL BE ATTENDING ALL AD TECH EVENTS. THE NEXT ONE IN LONDON IS SEPTEMBER 2007. ONES FORTHCOMING INCLUDE PARIS AND AUSTRALIA -Can you give me any insight on who are your major stockholders? what is rough split between insiders/institution INSIDERS OWN C.43% F&C HAVE C.10% A few specific questions on your financials: -I wondered if you are making efforts to improve your financial reporting/management information systems? I believe one of the reasons for huge drop in your share price in 2006 was the apparent misleading of the market about the performance in H1 which could have been because of on weak information systems/business intelligence (i.e. you issued outlook statement below on July 20th after the end of H1 period which seemed to suggest a good trading performance but then only 9 weeks later issued the disappointing trading statement & sell side estimates were scaled back to around your revised guidance Can you shed any light on exactly what happened i.e. on July 20th were you fully aware of costs the business incurred in H1? i.e. July 20th Outlook Statement : Jarvis Coffin, Chief Executive, said: "We are pleased with our overall trading performance in the first half during which time the Company floated on AIM, launched its new division, Burst Direct and significantly increased the size of its staff. The management and Board remain convinced about the prospects of Internet advertising. Despite some slumping forecasts for global advertising generally, industry analysts continue to maintain their very positive outlook for Internet advertising. We look forward to continuing to benefit from the investment we have made in the business to date and from the pipeline of new business which is strong. As a result, we therefore anticipate meeting our goals for the second half of the year." WHAT HAPPENED WAS NOT RELATED TO POOR MANAGEMENT INFORMATION SYSTEMS AND IN FACT THIS IS ONE OF BURST'S STRENGTHS. REALITY IS THAT REVENUE BASE IS QUITE VOLATILE EVEN THOUGH IT IS GROWING. I,E. A BIG CUSTOMER CAN QUITE EASILY DROP AWAY E.G, VONAGE. ADVERTISERS CAN CANCEL CONTRACTS FAIRLY EASILY. WHAT HAPPENED IS THAT IN JULY ALTHOUGH THEY KNEW H1 WAS A BIT WEAK THEY BELIEVED FY OUTCOME WAS VERY POSSIBLE BASED ON A LIKE FOR LIKE YOY INCREASE IN PRIOR 90 DAY PROPOSALS EXCEEDING 50%. UNFORTUNATELY THE CLOSURE RATES ON THESE PROPOSALS WERE WEAKER THAN EXPECTED IN A CRUCIAL PERIOD -LAST WEEK OF AUGUST. HENCE THEY HAD TO WARN. GOOD NEWS IS THAT THE PROBLEM WAS AROUND IMPLEMENTATION AND IS FIXABLE. MANAGEMENTS TIME WAS DISTRACTED BY DOING IPO BUT NOW THEY ARE CONCENTRATING ON IMPROVING THE OPERATIONAL PERFORMANCE -Can you give me TaCoda and Reed Elsevier as a % of your H1 Revenue? TACODA IS MAJORITY OF ADCONDUCTOR REVENUE AND IS LED BY INDUSTRY VETERAN DAVID MORGAN (PREVIOUSLY WITH REALMEDIA (NOW PART OF 24/7 REALMEDIA). ALL OF TACODA'S WORK ORDERFLOWS GO THROUGH BURST'S TECHNOLOGY AND TACODA ARE A HAPPY CUSTOMER. IT SOUNDED LIKE BURST WAS GETTING GOOD PRICING ON ADCONDUCTOR BECAUSE SOLUTION REALLY DOES ADD VALUY. REED ELSEVIER WAS NOT IN H1. PROJECT WAS DELAYED VS INITIAL EXPECTATIONS -I am a little unsure about the progression of the company's tax rate over time? Clearly the company had a tax benefit in H1 as a result of making a PBT loss. It looks to me like the company paid no tax on profits in financial year to end of Dec 2005. Can i take it that you have some NOLs which allowed this? What was the value of NOLs at end of H1? COMPANY WAS AN LLC (A TYPE OF PARTNERSHIP)BEFORE IPO COULDN'T TRANSFER NOLS TO THE NEW COMPANY POST IPO SO COMPANY'S PROFITS ARE FULLY TAXABLE GOING FORWARDS ALTHOUGH THEY ARE CONSIDERING WAYS TO LOWER EFFECTIVE TAX RATE -Can you tell me how the number of employees you have has progressed over the last two years? what is the current headcount? MENTIONED A NUMBER OF 65 PEOPLE AT IPO. DIDNT GIVE AN UP TO DATE NUMBER BUT STAFF NUMBERS HAVE INCREASED SIGNIFICANTLY -do you anticipate any new broker coverage in near future. Are Cannacord and Altrium still going to cover you going forwards? By the way I notice that Bloomberg has virtually no information on your stock within its normal description pages. You may want to look into this. THEY DO HAVE A NUMBER OF PEOPLE INTERESTED IN THE STORY BUT NO NEW COVERAGE IS LIKELY UNTIL CREDIBILITY IS RESTORED -Can you tell me any Long term financial targets the group has e.g. Gross Margin, EBITDA Margin, Capex as % of Sales etc? Are there any plans for the cash on balance sheet? NO REAL LONG TERM TARGETS. THEY BELIVE GROSS MARGIN MAY CONTRACT OVER TIME AS THEY SIGN INCREASING NUMBERS OF LONG TERM CONTRACTS WITH PUBLISHERS. THERE WAS NO REAL EVIDENCE OF DECLINING GMS IN H1 NUMBERS. THEY WANT TO SEE OPERATING MARGIN INCREASING AS SALES GROW FASTER THAN COSTS AND HEADCOUNT FUNDAMENTALLY THE BUSINESS SHOULD BE A CASH COW AND REQUIRES LITTLE IN THE WAY OF CAPEX. DOES SEE DEPRECIATION RISING A BIT THIS YEAR THOUGH RE: CASH THEY ARE NOT REALLY LOOKING AT DOING ACQUISITIONS AT PRESENT AND WOULD WANT THEIR EQUITY TO BE VALUED MORE HIGHLY TO CONSIDER THIS (SELLERS WANT A COMBINATION OF CASH + UPSIDE FROM EQUITY). THEY ARE ACTIVELY TALKING ABOUT WAYS OF IMPROVING SHAREHOLDER VALUE INCLUDING SHARE BUYBACKS. I WOULDN'T BE SUPRISED TO SEE A BUYBACK THIS YEAR AS A SIGNAL TO INDICATE THE STOCK IS UNDERVALUED. BILL SLIPPED IN A COMMENT TO ME THAT HE THINKS STOCK IS DEPRESSED WHEN HE SAID THAT THE STOCKS VALUATION IS NOT INDICATIVE OF THE TRUE VALUE OF THE COMPANY (HIS TAKE IS THAT THIS IS LARGELY BECAUSE OF MISTRUST) |
Posted at 22/11/2006 08:53 by wiganer KenThanks for taking the initiative on this, I tried twice to get replies from their investor relations people at Hudson Sandler, but never got a reply (maybe you could mention that to Mr Davlin). My question is about the shares compensation charge of $2,064,110 in the last accounts; could he clarify what it was for and whether it was a one-off. Clarity on that could do wonders for the share price. Cheers W |
Posted at 11/11/2006 12:58 by markie7 probably the original US investors who sold the stock on the float at c.80p! |
Posted at 30/10/2006 14:07 by tiredoldbroker I usually feel that trends repeat themselves in the market. When a particular sector is at the height of its popularity, a lot of money will be chasing stocks in that sector. Which means that it is easy to get away with an overpriced flotation in that sector, at that time, because normal critical judgement is suspended and passion governs the direction of cash for investment. The greatest example of this in the last decade was the tech boom leading up to the end of Q1 2000. You could float an "incubator" at several times cash value at that time, because investors wanted incubators at any price. The "justification" was that they'd make such marvellous investments that the premium would soon amount to nothing. The truth - that many tech start-ups would fail, and even the successes might take years to mature - was overlooked, for as long as the fashion remained.Within the last 12 months, I think a number of mining/oil stocks were floated or raised additional cash at inflated prices, because fashion was with them. I do suspect that BRST was floated too early in the lifecycle of its new media business, on a temporary wave of enthusiasm, and was issued at way too high a multiple of cash in the bank. The problem is that this leaves no room for error and many times over the last 5-6 years, I've seen the market really cane any high tech stock which fails to deliver right on the initial promises. So I suppose one part of my approach is to look at the accounts with a high degree of scepticism and not to be generous in my analysis of what the figures mean, and to treat any failure to meet targets as a definite red light. If a business is still at an early stage in its development, and not reliably making a profit or generating cash, I'd see share price relative to net cash per share as a key indicator of whether or not something is over-valued, as the share price can easily slide to below net cash if sentiment turns against the stock, and a development-stage business then has to prove why it should be worth more than the value of the development funding it already has in the bank. Just an idea, open to discussion of course. |
Posted at 18/9/2006 14:42 by wiganer I tend to view the activity of shorting gangs as creating opportunities for value investors. Maybe I should be a little less sanguine about it. There is a strong argument for them wreaking major damage: |
Posted at 18/9/2006 11:06 by wiganer I consider your analysis to be misleading. The only reason they made a small loss was because of the stock compensation award. You hypothesise that this award was in lieu of salaries, but have no evidence to support that hypothesis. My understanding is it was nothing of the kind.I can understand why investors who bought in at the IPO may be unhappy at management being awarded stock as a reward for bringing the company to market, but any objective analysis would leave aside such emotional cant. The realities are that what we now have is a profitable company with a cash pile and a listing, which is therfore well placed to make earnings-enhancing acquisitions to sit alongside its existing profitable and cash-generative businesses. The recent profit warning may undermine sentiment and make it drift further, and I shan't be adding at present. but neither will I be selling. If it does drift down to some silly level I shall add in size. |
Posted at 11/9/2006 12:46 by tiredoldbroker Pugugly, I'm sure its another of those cases where the underlying technology is interesting, and could actually generate worthwhile revenue one day - but over the last decade there have been so many of these flotations, too early in the product's life cycle, which have lead to investors being stuffed at the wrong price, and then market cynicism after several rounds of bad news - and it does seem to be the case that warnings rarely come just once, so I reckon this is perhaps still too early. Be interesting to see what the cash burn looks like when the figures are published. |
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