Internet Business Share Discussion Threads

[muffinhead] 29/4/2007 19:15

When the above trend is overlaid on the Alexa graph for the same period, the two seem to follow the same pattern

[muffinhead] 29/4/2007 18:25

There has been a slowdown in the last quarter

This time last year AF was recording substantial net merchant gains

March was the worst month on record with no net merchant recruitment...yes 50 gained,,,but 50 lost...cue PR statement strategic review

I await the figures for this month which may fall in line with the Alexa reach trend over last quarter

only too happy to be proven wrong of course ;-)
dyor

[aleman] 29/4/2007 12:20

I have not noticed a slow down in merchant sign-ups. In fact, I was getting a bit fed up of posting them with so many coming through a few weeks ago. I have noticed we seem to have lost a few US merchants as new ones have come on board but stonger merchants in + weaker merchants out = more affiliates + higher margins. I would imagine the US is starting to make a healthy contribution to profits, although only in single figures. It has potential to be the majority of the business, even though the UK will still be growing quite strongly for a few years yet but more in line with a maturing market. (I am just talking about AF here - not media which seems to have significant potential of its own.) I shall be interested to see if the company breaks down revenue and profits by country as the shareholders should know the exchange rate risk with pressures building up in forex markets.

[masurenguy] 29/4/2007 10:22

Are Interims still due in June ?

[12345th] 29/4/2007 09:35

Agred Buffet, cannot see Maz as a joint manager of ibg-plus-?

[muffinhead] 28/4/2007 22:28

Management could continue with organic growth until such time as the market can see EPS growth beyond the current year expectation of 1.9p or 26% up on last year, which is modest compared to IBG's peers.

If EPS did regain a racy ascent for 2008, which is projected in hope to 2.9p, then maybe IBG can go shopping with shares. However there appears to be a loss of momentum with recruitment of merchants for AF recently which maybe be due to macroeconomic issues. Unless this picks up or the media division does not perform as hoped, then 2008 forcast may come short of expectations.

The statement "trading is in line with current management expectations" does not hide the fact that there have been large increases in overheads due to moving offices, set-up and recruitment in Spain, Henoo creation, acquisitions, taxation kicking in...etc.

Maybe interesting speculative shareprice action as there usually is leading up to interims but cannot see much fireworks on the bidding front.

Anyone see an agreed merger as a possibility with an equity holding in an enlarged company? ...with a private company like affiliate window or similar which also needs to expand.

A combined company value created to £50 million level should put IBG on the institutional radar. I think IBG management needs to choose its first merger partner carefully which if successful will make future progress easier.

[aleman] 28/4/2007 17:42

No date yet. I could well imagine the strategic review will delay results, although logic would say it would be better to have the numbers in the open asap to help discussion and maintain fairness. Experience with other companies suggests they will be late, but IBG is not the same as other companies as was seen issuing the review RNS the day before the AGM. Many managements would have preferred fewer shareholders to turn up with tricky questions.

[spangle93] 28/4/2007 17:36

Was a date for the Interim results announced at the AGM ?

Seems to have been 2nd week of June in the last 2 years, but the company website doesn't yet show a planned date for 2007.

[aleman] 28/4/2007 16:34

FT has a comment on SRF that seemed extremely apt. Little listed UK competition. A strategic acquisition to gain foreign exposure, new technology and difficult-to-recruit technical staff for the suitor. Much lower rating than foreign peers so little dilution, even at a substantial premium. (IBG would be very earnings enhancing at current levels for many potentail suitors.) Shares rose on intitial news of talks and by even more when the deal was announced. (Note that SRF's recent numbers have been a shadow of IBG's.)

SurfControl concluded five months of bid talks with Websense, a Californian group, by agreeing to a 700p a share offer, a 40% premium to the UK group's share price. The proposal valued the internet-filtering group at £201m, a 63% premium to the price when talks were announced in December and 40% higher than Thursday's closing price of 500p. Lorne Daniel, an analyst at Arden Partners, said the price paid highlighted the discrepancy between US and UK valuations. As SurfControl had £22m on the balance sheet, he estimated it was valued at a multiple of almost 36 times underlying earnings. "It may seem a lot but you're up against some big companies like McAfee and Microsoft," he said. "For them [Websense], a deal of this size is very little. Earnings dilution will be minimal."

[aleman] 28/4/2007 16:15

So what value will they put on AF when revenue rises 95% in H1?




One of my pessimistic economic posts for LB:

[68steve] 28/4/2007 12:32

TD Q1 30% rise...

[aleman] 27/4/2007 20:45

Well done, cgequityinvest. I was hoping somebody would volunteer that type of information. £10m is only just over 3 times next years' cashflow, though, and just under 3 times EBITDA of £3.5m. Are you suggesting they will only go on historic numbers? Maz said he would have no trouble borrowing the cash. He was concerned about risk and the effect on the share price of depressing earnings for a couple of years. They might do better with a specialist lender rather than the banks, anyway. T2 Income specialise in lending to technology companies for instance although their typical rate is 6% over LIBOR so it sounds expensive.

[costapacket] 27/4/2007 20:33

Hi - thought I'd say hello as all of us 'old timers' seem to be here. Came through a major life change and survived so this is all 'fun' for me now. My views are unchanged from 2003 - a great stock and undervalued - it was 3p then and 32p tonight but you all know the story!

[cgequityinvest] 27/4/2007 18:41

Aleman - I can't see any banks rushing to lend 6/7 times ebit or cash flow for an acquisition. My banking experience for a company of this type would be 4/5 times max with any bank wanting a strong mix of equity to reduce the risk. I also think that IBG might come up against the same problems as they have with institutions, namely really understanding the business. The banks may also be wary given the management's lack of experience in integrating a significant acquisition.

So my sense is that current borrowing capacity is limited and unlikely to provide Maz with the sort of ammunition he requires to make the step change.

[kenatbabken] 27/4/2007 17:29

Aleman

For ibg to then own 100% of that company it may cost an extra £10m as the VC
and shareholders of that company wanting to make a profit so the £20m figure
banded about could rise to £30M or more.

I am unclear about whether its an aquisition or a cash injection they are
looking at Can anyone clarify?

[aleman] 27/4/2007 16:57

I did not know a £20m figure had been mentioned. To put that into context cashflow was £930k, last year with forecasts for £1.7m this year and £3.1m next. I could see a loan of £20m being okay 2008 on, but it sounds like the opportunity would be gone by then. Perhaps it could be done through a related company with IBG borrowing and injecting £10m for a 50% controlling stake in the new company with the rest made up by interested shareholders and a VC fund. A loan of £10m should be manageable for IBG with reasonable risk for existing shareholders and control of the big project. With cash demands for the project sorted IBG could even start paying a dividend which might cheer up those holders disappointed with the shareprice.

[the blackster] 27/4/2007 16:53

Personally I see the initiative coming from the directors at this time as a positive. Regardless of where the company could be in 12 to 24 months it has a good track record now, positive YOY growth, forcast growth and new divisions already contributing. Together this represents value for a buyer and there's a window of opportunity now to do a deal with all these positives on offer. The directors will look after their wealth, and ours. If I had 5 mill+ on the cards I'd be looking for a way to realise that and take my shareholders with me. 40p+ would still represent great value for an acquirer and I'm sure a great profit for most of us.

[reggieperrin] 27/4/2007 16:20

Baheid - from the reports from the AGM it sounds as though they have looked at equity but the combination of the low market value and cold shoulder from institutions has p*ssed on that bonfire. I think someone mentioned a figure of £20M as the amount required for their big expansion plan. That is about the market cap of the company at 25p a share (ie the price before the review was announced). So that amount of debt would wipe out the market value of the company if the expansion was a failure - ie a VERY BIG risk. If it was equity at 25p a share and the expansion failed then you are looking at a halving of the share price so still a big loss although not as bad. I suppose when it comes to big equity issues IBG will suffer because you only get one go at IPO money and they had theirs' and blew all of the cash before they established a viable business.

"Hi OBR

You could be absolutely right. Although I suppose if they financed it through equity issuance and it did not go as planned the value of their shares would also be negatively impacted. The key difference being the limited liability nature of equity finance.

BH"

[baheid101] 27/4/2007 15:49

Hi OBR

You could be absolutely right. Although I suppose if they financed it through equity issuance and it did not go as planned the value of their shares would also be negatively impacted. The key difference being the limited liability nature of equity finance.

BH

[muffinhead] 27/4/2007 15:23

i can't see the need for a strategic review.

The media division has been well thought out and developed up until very recently. Maybe Maz is a bit disallusioned as you say. Surely he knows that bottom line results take time to show and holding on will yield the value he has been planning for the last 12 months.

Or maybe he is concerned about a turn in the business cycle and the recent dip to 25p brought back memories of post 2000 flotation after the business was sold at the top of the market. Sell while the markets hot and there is still a window of opportunity?

Whatever others think, the Alexa reach figures maybe telling a changing pattern. Any bidder should delay until after the interims to get a value referance point on the business

[12345th] 27/4/2007 15:15

My Aim 2-year taper relief kicks in at the end of September ... do people think I may be lucky enough to use it or will we get taken out (long) before then? Thanks.