Shares in video search engine providers Blinkx have shed more than 50 per cent of their value following a significant downgrade on earnings expectations from investment bank Goldman Sachs.
Goldman's analysts reduced their earnings estimates for 2012 by 44 per cent to $15.1m (£9.7m), cautioning that organic growth will slow in the second half and throughout 2013 as Blinkx beds in its two acquisitions, Burst Media and Prime Visibility Media Group (PVMG) with PMVG's contribution only expected to add to group earnings in 2014. The research note further cautioned on short term execution risks associated with integrating the businesses.
The analysts also think that Blinkx has "yet to demonstrate any success in converting display advertising into video," which will be crucial in the second half of 2012 if it is to meet forecasts.
The downgrade came in spite of yet another impressive set of results from the group, which reported a 63 per cent rise in sales to $44.6m for the six months to 30 September. But acquisition costs and amortisation of acquired intangible assets chipped into pretax profits, which slumped to $1.5m, from $2m. That said, excluding the one-off costs, pretax profits would have almost doubled to $4.95m.
Following last month's placing, which raised $15.1m, the group ended the period with $52.9m cash on the balance sheet.
