Okay, since I managed to stir up a little controversy with my look at debt management company Fairpoint (LON:FRP) last time around, I thought I would stick with this theme and look at another controversial company, this time Blinkx (LON:BLNX).
What Does Blinkx Do?
The official blurb:
blinkx is an Internet media company that connects consumers and brands through premium content online. Founded in 2004, blinkx pioneered Internet Video Search using its patented COncept Recognition Engine (CORE). This technology leverages speech recognition, text and image analysis to deeply understand the meaning and context of video content to generate improved search relevancy for consumers and a brand safe environment for advertisers. Through its partnerships with hundreds of media companies, including NBC, Conde Nast, Reuters and Bloomberg, blinkx has indexed and search enabled millions of hours of video content. blinkx powers video search, discovery or monetization on thousands of online properties including Lycos, Discovery Networks, CBS and FoxSports. blinkx is headquartered in San Francisco, California with 15 offices worldwide.
Or, in the words of the website itself, it is:
A simple way to discover and share great videos.
Still confused as to what they do? Well, here is a link to a video demonstrating how to use the site:
What Is their Business Model?
London/San Francisco-headquartered Blinkx distributes ad-supported content, but has planted its flag firmly in video search and discovery. So it gets a cut of the advertising revenues.
Why has Blinkx Been Under Attack from Short Sellers?
This article on Bloomberg.com highlights a very critical blog post by a Harvard Business School professor, which triggered the stock’s biggest plunge ever.
In the Jan. 28 blog, entitled “The Darker Side of Blinkx", Benjamin Edelman, an associate professor of business administration, said his research indicated that the London-based company used deceptive software to inflate traffic counts and capture commissions. Edelman wrote that he prepared the research for an unnamed client.
At least 5 hedge fund short sellers have subsequently sold Blinkx short: the investment companies are Luxor Capital Group LP, Blau GmbH, Jericho Capital Asset Management LP, Valiant Capital Management LP and Oxford Asset Management LLP, according to European regulatory filings.
July 2 Profit Warning Underlines Problems at Blinkx
To add grist to the short sellers' mill, at the…
