Internet Business Share Discussion Threads

[coffeelito] 19/12/2007 11:30

Hear! Hear! Maz has been an unmitigated disaster in terms of valuing this company. His actions do look like someone who has COMPLETELY lost the plot! (Assuming he ever had it!)

[stemis] 19/12/2007 11:14

Sorry Baheid,

TMN might be a great company, IBG might do better under TMN's ownership, TMN shares might be cheap and have great prospects, BUT

there is no getting away from the fact that Maz and the other directors have stuffed this up big style.

Less than 12 months ago our shares were worth mid 30's. Today they are worth 10.75p. That's a historic P/E of 5.8 and a prospective of 5.4.

Its worth reviewing how we got here. Having explored the potential of a strategic buyer when the share price was 30p+, IBG management decided to forgo short term profit with the intention of building up the business for an eventual sale. Some of us were supportive of management, despite the obvious pain, in the belief that as long as IBG delivered on its plans, the share price would recover and there would be an eventual exit. What bloody fools we were.

Now, having walked the share price down to a fraction of its original value, Maz et al have done another about-face and decided to abandon that strategy at the worst possible time for IBG shareholders. We've taken all the pain and now 70% of the gain has been sold from us. If Maz thought being part of a large internet marketing group was the way forward, he should have done this 12 months ago or in 12 months time. This isn't strategy, its a shambles. These guys clearly don't know what they are doing from one day to the next.

When I spoke to Maz last week he was very cagey and defensive. I asked about the forecast for next year remaining the same and he said it was what they needed to do and implied they were still happy with it. However he noted that the market had voted with their feet in respect of the current strategy and they needed to have regard to that and the interests of shareholders. If this is the result then he has completely lost the plot.

None of this means that TMN won't thrive and that a combination of TMN and IBG isn't a powerful tie up. However even if TMN trebles to 120p (which would be an all time high and no doubt a tremendous result for TMN shareholders), its only back to 32p for IBG shareholders. Hardly delivering the long term value that Maz promised us at the famous meeting six months ago, is it.

[baheid101] 19/12/2007 09:30

Hi Ken

The two companies were on similar depressed ratings - to justify a premium TMN would have needed IBG more than IBG needed TMN. In my view IBG needed TMN more because they would have needed to spend loads i.e. depress profits to execute on a standalone basis and TMN have a lot of the skill sets required - particularly on the media side. If you agree that the prospects for IBG are better as part of the combined group then why sell on this rating?

TMN have significantly better institutional support and this will only increase as a bigger company.

I can't believe however that you were not consulted by management on this as such a large shareholder, that is shameful.

[niggle] 19/12/2007 04:24

Also Ken with respect, to publically state on here that you are trying to sell 500k shares is a bit silly - sorry.

[ninjatnut] 19/12/2007 00:22

Ken - stop whining.

Sector too risky. The whole market became very risky 12 months ago and in Aug it became obvious - but if you didn't get out then stay in because current valuations are not demanding especially for TMN.

60% institutions. TMN has far greater institutional support than IBG.

IBG got a poor deal. Obviously all IBG holders will say that and all TMN will say the opposite but with the current IBG management the share price was going nowhere rapidly, and the 50% of the shareholders who knew the deal supported it so it must have some positives.

Selling shares - Big mistake TMN is seriously underrated.

Selling 500k shares - You don't really expect that liquidity, it will have to be a matched bargain so speak to the company broker.

[kenatbabken] 18/12/2007 20:21

BH

It has in my opinion become too risky to invest in this sector ( In the size
that I have) whilst I agree that TMN should produce better returns from the
IBG business the citeria I look for is at least 60% of shares are held by institutions or LTH,s and directors hold a chunk,TMN fall quite a way short in
this respect as after the take over I will hold more of the company than all the directors.

TMN have got a good deal and IBG shareholders a poor one imo,As stemis says
current IBG holders will only get 30% of any uplift post Takeover (Please don,t
call it a merger) Clearly Maz wanted out at any price and has got his way, I can also see him and the other directors offloading from July next year.So for
me to see a decent return the TMN Sp would need to rise above £1.

The reason I wanted to sell shares yesterday was to short TMN to cover the
rest of my shares with a spreadbet as I thought its share price may of dropped (Not
allowing for the IPH news)

It appears that out of the 500k sale I tried yesterday that they did sell
25k so I,ll have to notify the Takeover Panel

Ken

[hirschnathan] 18/12/2007 19:15

Thanks beaheid for the c report.

I am with baheid on this one. I honestly think ken, your shares will do better with seemingly better experienced management.

[baheid101] 18/12/2007 19:10

Stegrego - I think it is a combination of IBG's share price falling in sympathy with TMN's, which is CLEARLY being pulled down by in my view misinformed investors reading across from IPH's profit warning. There will also be some long suffering IBG shareholders who are throwing in the towel, which i can understand as I have held shares in IBG for over 3 years.

Both are hugely undervalued companies whose already good prospects are made even better by the prospective combination and I look forward to reading a fuller account of those prospects in Q108 from TMN and the brokers.

[baheid101] 18/12/2007 19:04

I am really sorry to hear you are unhappy about the merger Ken - for me it solves the principal concerns that I had about IBG, namely that they would have needed to supplement their management and capabilities to execute on their growth plans. TMN have a far stronger management team and board and the IBG guys can get on with running what is clearly a very good affiliate network in what are growing but increasingly competitive markets.

[stegrego] 18/12/2007 19:01

If anything, the IBG takeover is dragging down TMN and not vice versa.

TMN havent reported any bad news at all (apart from taking on IGP imo)

Whoever was saying that this was being dragged with TMN ought to perhaps look at the IBG shareprice PRIOR to the start of the subprime stuff and notice that it had fell off a cliff before it kicked off.

[coffeelito] 18/12/2007 18:50

all we can do now is pray. hands together and eyes closed.

[baheid101] 18/12/2007 18:33

interesting GWP23 ,

its net cash balance of £1.7m is worth 2.2p alone

Its ecommerce division, which remains profitable and is being sold off is worth at the absolute bare minimum £1m. Remember that they own a warehouse freehold, which they paid £250k for in 2005 so the £1m would value the ecommerce operating business at just £750k. The £1m valuation adds 1.3p to the valuation

So at 5p you are ascribing 1.5p or £1.15m of value to Affiliate Future, one of the UK's leading affiliate networks that is growing profits in a bad year at 35%, and the IBG Media business, which mainly comprises assets that it paid around £1.2m for(Cheapholidaydeals £1.1m, netfreestuff £120k) for and that generated EBITDA of £430k in the year just gone. So you think that IBG's continuing operating businesses are worth less than 1x their historic profits.

That makes no sense at all

[kenatbabken] 18/12/2007 18:31

GWP23

Thats one hell of a loss,Tried to sell 500,000 yesterday but the MM,s did,nt
want to know,I don,t think it,ll go to 5p but WTFDIK as if you,d of told me
at the beginning of this year it would be nearly in single figures I,d of said
you were crazy.Its down to the warning at IPH and people GTFO before the
takeover,Talk about out of the frying pan and into the fire!!

[omlaysause] 18/12/2007 18:28

GWP23 - the IBG share price is irrelevant now, only the TMN price is of any value. Unless the deal doesn't go through IBG could go to 1p and it wouldn't matter.

[moob] 18/12/2007 18:26

Have to agree GWP, this has got lead boots now the move will be in tandem with TMN

[gwp23] 18/12/2007 17:46

sold out with 70% loss...going sub 5p

[baheid101] 18/12/2007 16:36

I am trying to reacquaint myself with TMN nathan but Canaccord, who are unconnected to TMN and the only covering broker that I have access to, are forecasting the following (as at Dec 6th):

FY08 PBT £3.94 (+34% Y/Y), fully diluted EPS 5.5p (+17% Y/Y)
Target price upgraded to 76p to 70p on management guiding down costs (management happy that H2 costs will be same as H1 having completed the scaling up in H1). Forecasting £1.6m of cash on the balance sheet by 30 April 08

So as a standalone company pre-IBG acquisition TMN are currently trading on a P/E of 7.8x, which falls to 7.5x if you adjust for the 2.64p of cash on the balance sheet.

[hirschnathan] 18/12/2007 15:59

Baheid

Whats full year guidance, interims nothing too impressive for tmn?

[baheid101] 18/12/2007 12:04

Cannacord research note post interims

'management reported strong current trading, with revenues up 30% Y/Y in October and 40% Y/Y in November and is confident of meeting fully year guidance'

that was written on 6 December

[aleman] 18/12/2007 11:55

Whole sector looks to be having a poor Christmas.

[sseajack] 18/12/2007 11:46

BAHEEID101

were did you get this info tmn sales up 40% in november ?.thanks

[baheid101] 18/12/2007 11:38

there is just no confidence in the sector at all. IPH, who compete with TMN's TMN Media division on lead generation and email marketing have issued a trading statement saying that their UK business has 'underperformed'. This contrasts with TMN who said that TMN Media sales were up 30% in October and 40% in November having invested in new infrastructure and people in H1. So IPH's problems are company specific yet TMN shares are off 10%! its very frustrating!!!

[neilrr] 18/12/2007 11:33

Has anyone called the boss for an explanation?

[omlaysause] 18/12/2007 10:17

I can't believe this. TMN going down and even some of their boys are jumping ship ..... scary!!

[stemis] 18/12/2007 10:11

IBG share price down to 11.4p, now we've tied our boat to the sinking share price that is TMN.