Internet Business Share Discussion Threads

[aleman] 03/7/2007 11:58

the analyst - I was expecting much higher than that for H1, although I think growth will slow considerably into H2 (on an annualised basis with a strong comparative), which is why the company is so keen to invest in expanding other bits of the business. The results were very positive so I think Xmas and sales went well. I expect they started to invest cashflow in H1 but after February found that things started to slow as the economy hit consumer spending and then realised that extra staffing costs for significant growth which didn't materialise would eat into expected margin for H2. I still expect revenues for AF H1 to be very good, with a slow down to more like 40% for H2, with the company as a whole a bit lower than that. Does that tie in with the new forecast? I expect the problem in the short term to be costs for reinvesting the cashflow in expansion elsewhere. I get the impression AF is slower but okay, but they are not united in what to do with the slightly lower than expected cashflows it will generate in the months ahead.

[the analyst] 03/7/2007 11:10

Last year's interim business overview will make and interesting comparison to this year's when it comes out:

"Business Review

Online Advertising Network

The success of our online advertising network, AffiliateFuture, continues at an
impressive pace. Divisional sales increased 190% during the first half of the
year in comparison to last year, with divisional profits up by 406%.
AffiliateFuture continues to acquire new merchants and publishers in order to
fuel this growth and by the end of May 2006, there were over 650 (2005: 440)
merchant accounts operating on the network.


IBG demonstrated its innovative approach through the launch of Henoo.com, a
holiday search engine enabling online consumers to access over three million
package holidays. The innovative technology behind Henoo.com has also been made
available to the AffiliateFuture's network of publishers. The Board believes
that the Henoo.com platform has excellent commercial potential and whilst it is
not expected to materially affect current year projections, the Board believes
that this platform can be successfully exploited over the coming years.


The technology for Henoo.com was developed in house with significant benefits
from both a functionality and speed of development perspective. This further
validates the Board's decision to scale back the services side of the business
and use our extensive in house expertise to further develop our core offerings.


Whilst still in its infancy, our US operation is progressing as planned and is
on-track to achieve a break-even earnings before tax performance on a monthly
basis during the current financial year.


During the period under review, IBG moved into the Spanish market via an
acquisition of a small travel business based in northern Spain. Since then, a
strategic alliance has been formed with Global Red, a Palma based design and
development agency to accelerate the take up of AffiliateFuture in the market.
Our AffiliateFuture network is now live in Spain and the early signs are
positive.

E-Commerce

At the end of the 2005 financial year, IBG acquired a small warehouse in
Worthing as a base for its e-commerce operations. As previously reported, the
implementation of the new operations at the warehouse has progressed smoothly.
For the second consecutive year the Board has set the e-commerce operations a
20% sales growth target. I am pleased to report that this is on-track with sales
growth of 33% achieved for the first half of the year, which includes the key
selling periods of Christmas as well as the New Year fitness peak in January.


The current financial year has seen a significant increase in the levels of
advertising across traditional specialist media, which the Board has undertaken
with the purpose of better establishing our key e-commerce brand, Sweatband, in
the marketplace.


IBG's e-commerce operations have taken the first tentative steps outside of the
UK market with the launch of Sweatband.es in Spain. This business is currently
operating from London and on an extremely small scale. At this level, it is the
Board's intention to establish the key performance metrics for the Spanish
market, before considering more serious expansion over the coming periods.

Web Hosting & Services

IBG's web hosting and creative services operations are performing as expected.
The percentage of sales accounted for by this area is expected to continue to
decline as the advertising and e-commerce operations continue to grow.

Strategy & Outlook

Our strategy remains unchanged as we continue to increase the scale of the
existing operations domestically and internationally, whilst exploring new
opportunities for the future. As part of this strategy, IBG continues to review
bolt-on acquisitions on a regular basis.


The performance achieved in the first half of this year clearly demonstrates
IBG's potential. The focus of the Board is to continue to deliver good financial
performance and to maximise shareholder value by exploiting the potential of our
business model.


Current trading is in line with management expectations and as such we look
forward to the rest of this year with great optimism.


The commitment shown by all the Company's employees has been outstanding and I
would like to take this opportunity to thank them.


We would like to thank all the shareholders for their continued support."

[12345th] 03/7/2007 11:00

Dividend dividend dividend dividend. It is the ONLY way for this company to regain any credibility in the short term. What a disaster you have on your hands Maz. Alternatively, just take it private and you and we PI's can have a much needed break from each other.

[the analyst] 03/7/2007 10:58

Did I miss andnmand's end of month figures?

[the analyst] 03/7/2007 10:57

Anyone got any thoughts on expectations for H1 figures when they are announced?

Obviously, AF is the important part of the business, although it will be interesting to hear what is happening about progress within the media and ecommerce divisions

In the last interims, AF revenue was up 190% to £4.3m, accounting for 76% of group turnover and mmaking £541k pre-tax.

Should we expect £6m revenue from AF this year, up around 40%? £700k profit?

[bonio10000] 03/7/2007 10:20

But long term if the shares are undervalued it is off less benefit to the shareholders.

If the shares are worth 30p then buying shares at half their worth is far better than a dividend.

The question is what are the shares really worth?

[aleman] 03/7/2007 10:12

10% per year on a dividend would do much more for the shares than a buy-back. The shares would jump immediately and the company would be in a better position for future strategic discussions.

[68steve] 03/7/2007 09:35

Maz needs to reassure the market that new forecasts will be met and a share buyback program of 20/25% over 2 years to have any impact on the SP,IMHO...

[the blackster] 03/7/2007 09:32

Maz still said they are not going to be much under forecast the year - if so the share looks oversold and we should see a bounce when clarity is added to the situation by the interims

[nghomi] 03/7/2007 08:27

RNS has taken away the prospect of any significant growth in earnings for the next 24 months. I still beleive that market is giving a high rating to IBG at 15p per share. I expect a gradual fall until the interims are announced. We could see 12p by then. We know that the interims will not look good as we are told majority of profit will be in the second half.

[68steve] 03/7/2007 08:17

Looks like Maz is leaving interims as late as possible to update the market again...

[12345th] 02/7/2007 19:46

polzeath - dge, apart from being a massive company besides which ibg disappears in significance, has been paying a good dividend for years and years.

[the analyst] 02/7/2007 19:34

tsigoloroh, hopefully it doesn't get there - it's a worry rather than an expectation

I'm hoping that the results can give a crystal-clear picture of the company and it progress / future plans with no ambiguity. Ideally, investors reading the results rns will coma away with a picture that IBG is a company that knows exactly where it is going. Visibility is key imo.

I understand that the company can't reveal planned new products if they are to be kept secret until launch. However, they should inform brokers that new products are vital to reach targets, because that is a major risk. Lets be clear, nobody here thought that the results targets were relying heavily on the success of as of yet unlaunched services. The broker certainly didn't seem to think that was the case, so it leaves the question as to whether there is more to the warning than they let on.

Again, it's visibility that is key to the rating at this stage.

[tsigoloroh] 02/7/2007 19:24

the analyst - 2 Jul'07 - 19:21 - 2557 of 2557


My worry would be that continued negative rns statements results in the share price stagnating around the 10p support level


how soon for 10p???????????

[the analyst] 02/7/2007 19:21

My worry would be that continued negative rns statements results in the share price stagnating around the 10p support level, whilst a share buy-back would have no effect on the share price, but increase Maz's stake to almost 30%

At that stage, shareholders may well start to feel that a takeover or even a management buy-out is attractive. At the AGM, the only reason Maz thought a buy-out was unlikely was because of the costs. At around the 15p level and if his holding increased to around 30%, those thoughts may change. I'm sure he would like to get away from the pain of running a public company, people phoning him up to call him 'idiot' etc.

[tsigoloroh] 02/7/2007 19:06

since moneyweek writ their written diarrohoea, the price has halved

[the analyst] 02/7/2007 19:06

Quite a different company though, isn't it polzeath?

Diageo are a multi-billion pound market cap with low rate of organic growth and huge insitutional support. Seems perfect for a share buy-back.

I think people get a different impression of things when a high growth microcap begins to buy shares back. It can give the impression that the company no longer have the desire or ability to keep growing, but need to reduce the shares in circulation to improve eps instead.

Not long ago IBG were talking of more bolt-on additions for the company. Then the review came and we had talk of a potential sale. At the AGM Maz mentioned some mysterious major opportunity, but that has not been mentioned since and his last post seems to deny it ever existed:

"the managnement of IBG do not have some completely unrelated new project that we're wanting to exploit"

Now we have talk of a share buy-back. Blimey, no wonder people here are confused.

I'll be glad when we can get all this ot the way and get back to good old organic growth, PEGs, EV/EBITDA etc., rather than wondering what is going on

[polzeath] 02/7/2007 18:45

Diageo have a massive share buyback prog going on, very successful it is, too :-)

[polzeath] 02/7/2007 18:22

12345th - maybe you should tell DGE where they're going wrong! :-)

[knowing] 02/7/2007 18:12

The Blackster - 2 Jul'07 - 16:14 - 2542 of 2550

Neither just passing a comment. Ofcourse if it does fall hard then it may be worth looking at.

[12345th] 02/7/2007 18:08

Paying a dividend is the best way to get taken seriously as a small company. Share buybacks have been shown to be a complete waste of time in terms of increasing the share price Maz, your behaviour of late has been disastrous. PAY A DIVIDEND!!! You want to get institutional buying? PAY A DIVIDEND!!

[the analyst] 02/7/2007 17:14

I think it's 32.5% LB, but yes you're right it's a big percentage. I keep forgetting how Brown has changed those laws. No wonder he hasn't mentioned that one as an option.

I'll go back to using the cash for making acquisitions of profitable, synergy-forming companies as my preferred option...

[hirschnathan] 02/7/2007 16:33

Why is it taking so long to get interims out

[lord buffett] 02/7/2007 16:30

the analyst

I think you're forgetting that he'd lose 40% of that in income tax, which wouldn't be available to invest - a similar story for many other investors I suspect.

Do you work for Gordon Brown by any chance?