Bright Things Share Discussion Threads

[pink/e] 30/10/2009 21:47

The argument about the exchange rate is ludicrous. Totally irrelevant to the business model and just an attempt to distract.

LDMachin, if that is your number one argument against the company, then you are struggling pal. Oh yes, I forgot, you said earlier that you actually WANT to buy shares! hmmm..... But you want them at 0.75p. Yes, we would all like some more at those levels please.

Look, if it starts to look like Britain will take on the Euro, then the Pound will be devalued over a matter of minutes/hours/days. That would be a massive boom for Bright Things, as earnings would go up by 50% overnight.

[77monty] 30/10/2009 19:44

Perhaps, all this effort on a thread for a share that he doesn't own, is so he CAN buy in at sub 1p!

[the analyst] 30/10/2009 19:34

LDM,

What doesn't make sense with your argument is that you say they are doomed, but you also say you would like to buy shares at 0.75p?!

Why would you like to buy shares?

What do you see in BGT that makes them a nice little punt at 0.75p in terms of earnings, as per your LNG comparison?

[the analyst] 30/10/2009 19:31

"they can afford to wait until earnings catch up with the valuation..."

Can they?

How much cash have they got left?

What is their current cash burn rate?

They had 12,000 networks paying $55 pm at the last count in July...

[ldmachin] 30/10/2009 19:18

the analyst,

'cause they are the market leader and have the resources and funds to stay that way for a very long time... they can afford to wait until earnings catch up with the valuation...

... where as BGT don't have the luxury of resources, funds or time.

[the analyst] 30/10/2009 18:47

"Doesn't matter what type of businesses they are, a valuation has to be justified"

So how would you explain ning's valuation of $750m?

OK, so $50m of that valuation might be down to cash, but how about the other $700m?

[ldmachin] 30/10/2009 18:38

the anaylyst,

"web 2.0" is just a buzz word for 'the next generation of websites'... that's all. A business it does not make.

Ning have a very large cash pile, which forms part of their large valuation.

In 4 years time, BGT will still be raising cash...

I compared LNG and BGT because of the market caps of £10m in my example. And how LNG had to make profits of around £2m to justify that. Doesn't matter what type of businesses they are, a valuation has to be justified... and BGT turning over £350k in six months (when costs are £1.5-£2m p.a.) does not justify the current market cap of £3.5m. They are very very far from profitibility, hence the perpetual need to raise cash at shareholders expensive...

[the analyst] 30/10/2009 18:14

Hi LDM,

Just so you know, I can't "see 4p again", as I've never seen it before here - I've been paying between 1p and 1.5p for my shares, so far.

Just as you think they might be worth a punt at 0.75p, I think they have been worth a punt at 1p-1.5p

[ldmachin] 30/10/2009 17:38

the analyst,

I think you'd be lucky to see 4p again (especially with the future dilution included). The market cap would be approx. £10m at 4p (just using the current share issue count)... that's a high enough valuation!!! LNG is valued at that and they make £2m profit per year at present! This isn't dot-com boom time again! BGT are no where near making £2m profit p.a., they are no where near even generating £2m in revenues p.a.!

You're keen to buy a few million shares? Well, if you must, you should have a word with those directors about including you in the future fund raising via equity issue...

... best way to obtain size in such an illiquid stock.

All the best pal.

[the analyst] 30/10/2009 17:33

"So, here's what you can expect from us between now and the end of the year:

A new public Network Creators Network launching November 9th with articles, blog posts, screencasts, updates on new releases and a staffed forum designed to help you get the most out of your Ning Network.
A redesigned Ning.com focused on new Ning Network discovery, Ning Network management and no default Ning-wide profiles.
Prioritizing the work to make existing features easier-to-use and address long-standing idiosyncrasies on Ning Networks rapidly in two-week intervals over entirely new features.
At least 24 hours advanced notice for small releases and 5 days advanced notice for large releases on the new Network Creators Network.
A detailed change list for both large and small releases on the Network Creators Network.
An bi-weekly email with links to the best of the new Network Creators Network and news from Ning.
Platform uptime goals of over 99.9% and continued performance optimization of your Ning Network.
Solicitation of early feedback and input into our next generation Ning Network on the Network Creator Network.
A revamp of our Ning Help Center to drive public, transparent responses and even more effective troubleshooting.
A better definition and ongoing conversation about what it means to be a premium Ning Network. Much of the criticism we see from Network Creators is a direct result of the gray area that exists between what we offer and what you want from us when you purchase the premium services on your Ning Network.
There's no question that when we're moving as fast as we can to innovate and deliver an ever increasingly awesome product, we are going to do things that, with hindsight, we'd do differently. While we'll never be perfect, we certainly look to learn from experience, building upon a stronger foundation of what's working with a new set of things that only makes it better."

[the analyst] 30/10/2009 17:10

Always a pleasure, LDM - I don't dismiss all your comments

I think it's quite interesting to see that you would fancy a punt at 0.75p

I know you would be looking for at least a 4-10 bagger, with such risk attached, so to me, that makes the real LDM target (the one you won't admit to) between 3 and 10p!

Personally, I have quite a bit of extra cash tucked away to invest in BGT at some stage. I'd be very interested in buying a few million shares, if they had funds in place to see them through until early 2011

[the analyst] 30/10/2009 16:17

"THE US DOLLAR WILL BECOME MORE AND MORE WORTHLESS"

You sound very sure, LDM - maybe you should think about selling all your shares and getting into the forex market instead!

In terms of currency, the only thing that really matters for BGT is the $/£ rate because our sales are in the US, but our company works in pounds.

By the looks of it the British economy is more screwed than the US. We are still in recession, whilst the US is now officially out of recession.



" China, Japan, France and Germany have also returned to economic growth, but Britain's economy shrank again during the same quarter"

"Gordon Brown's claim that Britain was "better placed" than other wealthy countries to beat the economic downturn returned to haunt him yesterday as the US recession officially ended."

[carl79] 30/10/2009 15:29

I'll make this quick LDM.

You did say they'd go bust. You laughed at anyone considering investing as a result...the share price was lower than it is now when you made the comments!

Your comment on the $ is taken on board but it is not feasible! Their customer base is predominantly US based. You suggest charging in Euro's becasue it is doing well right now - but you contradict yourself in the argument about BGT being a UK based company etc - they should in this case charge in £, no? If not then should I expect my phone bill to be in Euros next month because that would get the respective company an extra 5% before the additional costs associated with cross currency trades! Come on, be sensible. They charge in Dollars - get over it. If the dollar plummets then i guess they'll address the problem by either charging more dollars or switching the currency to GBP - doubt they'd ever charge solely in Euros unless the EU is where their action comes from...

ref your comments to TA - you do know that they have close to 100k networks in total right? A lot of these ex-ning users are in that camp - not ONLY in the premium one!! So they "got" far more than just 1000 ning customers this past 6 months and continue to do so...you should remember that in all of Nings existence they only have 11/12k paying customers - in 6 months BGT has a 10th of this and is gaining ground by the day.

"Ning can just constantly undercut Social Go prices until BGT runs out of cash..." This shows how little you know of the industry, Ning's strategy and the way BGT will win out here - look, in a nut shell this is not going to be about cost, it will ultimately be about functionality - SG is a more functional platform if albeit immature right now.

At least you now call it a good product, you never used to! lol

[ldmachin] 30/10/2009 14:47

Carl79,

I don't know how i can make this anymore clear:

SOCIAL GO NEED TO, ONE WAY OR ANOTHER, GET OUT OF SELLING THEIR PRODUCT IN US DOLLARS. THE US DOLLAR WILL BECOME MORE AND MORE WORTHLESS.

It will also do the shareprice no good at all! Imagine your business earning worthless US dollars... and yet your company (BGT) is UK based, and valued in GBP on the stock exchange. How long do you think BGT will be valued at a heafty £3.5m when their earnings become more and more eroded as the dollar depreciates?

... also, it is not good that Social Go is UK based and their central costs are not in US dollars either.

BGT's two solutions to this:

Charge in another currency. i.e. Euro's. Now, obviously, Social Go can still display the US $ equivalent on the site for users when they buy and sell packages/items... it just means this value will fluctuate from month to month. I can see why this is not a popular option, but it is an option and can work if done well (i.e. just changing the fixed exchange rate once at the start of the month or something similar).

Hedge against the US dollar. This is the preferred option takes lots of free money and expertise. Do BGT have the cash pile to beable do this?

AND NO... i never said BGT was going bust... i said they will do fund raising after fund raising after fund raising, 'cause that's all they ever have done'... and that has been proven correct...




the analyst,

Hi pal. By "euphoria" i mean the euphoria of 'existing Ning users' seeing that there is an alternative to the 'dreaded' Ning... it's been a good six months now... and Social Go has only managed to get a 1000 of those customers (very few will be new 'never had a social network before' customer). If Ning was that bad, they would have left in their droves by now. BGT just hasn't got the cash to compete with Ning... Ning can just constantly undercut Social Go prices until BGT runs out of cash...

Social Go = good product, but many many years too late to market.

[the analyst] 30/10/2009 14:03

Money raised to develop the CURRENT business - SocialGO.com:

Nov 2007 - £955,000 raised at 4p per share

Sept 2008 - £734,500 raised at 1.25p

April 2009 - £750,000 raised at 1.25p

Sept 2009 - £940,000 raised at 1.25p

In total £3.4m have been raised by the company for developing SocialGO

NOTE:
Historical business, April 2004 - Nov 2007
Prior to Nov 2007 BGT had a business based on asic/bubble/iDVD - the business survived from April 2004 until Nov 2007. That business basically went bust, so SocialGO can be considered to be a new venture, a new business that was created in November 2007 with the initial fundraising

[the analyst] 30/10/2009 12:49

I agree, these placings are usually announced last-minute, rather than many months before they are required. There is not much 'risk' to doing it last minute, especially when the shares are mostly bought by Directors, staff, friends, family and ex-colleagues

Your numbers do seem to be way off the mark, Ian - both the £80k pm figure and your estimated timing of when the next placing will be.

Still, only time will tell. If you are right, we will acknowledge it

But, if you are wrong and they wait until 2010 to raise funds, we will gently remind you about your 'before year-end' prediction! :)

[pink/e] 30/10/2009 12:15

"iantc - 30 Oct'09 - 08:16 - 4690 of 4691
pink ,you dont wait till you have run out of cash before you try to raise more cash ,that puts you in a very weak position "

Sorry Ian, I think you are showing a deep lack of understanding of how microcaps like BGT work. In reality, they nearly always wait until the last minute to announce these placings

According to your calculations, they raise £950k, then spend only £360k of it and then go and raise another million or so in December when they still have £590k in the bank. That sort of thing simply doesn't happen. I can assure you, they will not be raising more funds in 2009, they still have around £700k in the bank right now!

They might well get the investors on board and maybe even semi-finalise the funding details before the end of the year, but the announcement will, as is nearly always the case, be last minute. That's just how it works

[the analyst] 30/10/2009 11:08

Hi LDM,

You talk about an initial "euphoria" about SocialGO, but I don't remember one. Did you experience euphoria at the beginning?

I saw a slow, steady and conservative launch and I still see steady progress, with very little hype having appeared yet. I don't want to see hype until they have a new few key features up and running smoothly on the platform and they have taken more of the hosting over to the US to cope with demand

You might be interested in something that has happened over the last couple of months. That is, that many articles about 'build your own network' no mention SocialGO as well as ning. Previously, they would never have mentioned SocialGO, but now they are getting this extra free exposure. Take a look at these two examples:




After these two releases (which the Directors knew nothing about until they were published and they spotted them), I noticed that the sign-up rates jumped. It resulted in a couple of weeks where they averaged 4,000 sign-ups per week, as opposed to the normal 1,500-2,000 range.

Six months ago, SocialGO would not have been mentioned in these journals. So, slowly, slowly, the PR is improving and the word is getting out there.

[the analyst] 30/10/2009 10:56

Hi LDM,

It's not really a case of 'thinking' that the trend is on the way up. It's a case of being told at the AGM yesterday that the revenue HAS increased every month and revenue IS STILL increasing every month and that they expect that to continue. I was told that October will be a record month for sign-ups and conversions to premium. I have to trust that is true

Progress has not been rapid in terms of revenue. The conversion rate is in-line with ning's rate. No mean feat, but it means that SocialGO is in effect no better or worse than ning.

But, the product is improving massively and I know there are many 'essential' features going to be released over the next six months that will improve the revenue rates

I think they will need to raise more funds in March. Your thought of having around 2000 networks in six months time is pretty much in line with my model for their progress. OK, maybe I'm looking for 2500. If they get there, then I don't think it would be 'game over' as you state, but simply that they would need more funding.

The BIG risk in the eye of the investor is the possibility that extra funds are raised at a big discount. I'm happy with 1.25p per share, as this is close the the level I bought at, but there is always a risk with any company, that they decide to take investors to the cleaners and issue shares at a big discount to current prices

[ldmachin] 30/10/2009 09:00

the anaylyst,

You may think the 'trend' is going up month on month... but it's taken them 6 months just to get 1000 paying customers... and that includes the initial euphoria of Social Go. If it takes them another 6 months to get another 1000 paying customers then it's game over. They've struggled so far (in terms of sign-ups, and even getting the platform to a usable level), and i think that'll continue.

Also, either way, the US dollar is going depreciate greatly in value over the coming months and years... and BGT will need to deal with that one way or another... do they have the funds to hedge on the currency markets against this?

I'll keep watching, but i don't see anything to move the shareprice up in the near time, it's either going to flat line further or drop as holders move funds.

[77monty] 30/10/2009 08:52

But going by that logic iantc, hopefully they would have already had a decent cash balance before they raised the last lot of cash.

Also, lets not forget they have other income streams too. They will be getting advertising rev on free networks and they've also got widget income. Not much I admit but better than nothing.

Cheers

[iantc] 30/10/2009 08:16

pink ,you dont wait till you have run out of cash before you try to raise more cash ,that puts you in a very weak position ,it was a quick look at the numbers as i said ,£80k loss pm was a minimum number but will have a look tonight ,your £130k may be a lot closer