Video search and advertising group Blinkx yesterday shocked investors by warning that its first-half earnings are set to be $5m (£2.9m) lower than management expectations, causing its shares to lose more than half of their value.
The Aim-listed company blamed industry-wide issues around the efficiency and effectiveness of online advertising, as well as a lingering slide in demand following a disparaging blog on Blinkx’s business practices.
Ben Edelman, an associate professor at Harvard Business School, posted a blog entitled “The Darker Side of Blinx”, alleging that the company used “deceptive tactics”, which resulted in the share price falling by over one third after the blog was posted in late January.
Blinkx denied the allegations, and put forward a detailed rebuttal a few months later after an internal investigation.
Blinkx, founded in 2004 by Suranga Chandratillake, former US chief technology officer at Autonomy, has partnerships with hundreds of media companies. The company posted a 25 per cent rise in revenues last year to $247m and adjusted profits up by 30 per cent to $31.9m.
Its shares crashed 52 per cent yesterday to just 31.5p – the lowest it has been in more than two years, and far below its peak in November 2013 of 234.75p.
Analysts at Numis said yesterday morning they were reviewing their stance on the stock but initially believed the firm will produce earnings of $33m on revenue of $268m for the full year.