LON:PHRM^J17 | Phorm - Buy At £5.60, Price Target £20

15th Jun '09 by HamsterWheel

199 comments 30801 reads

Astaire (the new name for Blue Oar) have today issued a buy note on Phorm with a price target of £20, about 5 times the current price. Salient points : They expect phorm to sign up ISPs in Japan (rumour that it's NTT) and Brazil shortly, and with France, Germany, Italy, Spain and the US and Canada all done by the end of 2010. So exponential growth. Their estimates of the share of online advertising that Phorm will nab ranges from the conservative 3% through a base case 7% to an optimistic 13%. Even 3% would be MASSIVE ! 2011 EBITDA is $67m - not dissimilar to the current market value of the company. There are a lot of odd types who really don't like Phorm at all, they congregate at a site called nopdi.org Per the buy note though, Astaire seem happy that Phorm has got them all well and truly on the run, even got a site to smear them a tad - www.stopphoulplay.com So a very interesting company. www.phorm.com for what they actually do

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BTCustomer

23rd Jun '09

In reply to HamsterWheel (post #172)

For the record I note that you have failed to either substantiate your claim or refute mine. . Fact - Phorm cannot detect cookie authenticated pages. Fact - Phorm cannot avoid profiling the personal data and sensitive personal data on such pages. Fact - Phorm are directly affected by the privacy legislation relating to such data. Fact - Phorm are directly affected by the EU statement referred to above. Fact - their business model is once again in deep trouble.

Opinion - (do your own research) Facebook will need to revisit their earlier decision about choosing not to "optout" of being profiled by Phorm.

PengiPete

In reply to HamsterWheel (post #178)

This thread is abut Phorm not the NoDPI website or the avatars used by it's members in repsonse to the smear campaign launched by Phorm.

This is not NoDOPI, But as you admit reading NoDPI posts you will be well aware of the inaccuracy of many of your claims here because you have seen the factual rebuttals there.

Just for the record, I regard reference to the term "privacy pirates" as an abusive slur against those who are campaigning against Phorm including myself. It should not be part of this discussion. It is an abusive term coined by Phorm on their inaccurate smear site Stop Phoul Play which so far has had at least six inaccurate smears taken down, and several more effectively rebutted by the people smeared on the site.

This comment has been moderated

Habbakuk

http://www.telecomtv.com/comspace_newsDetail.aspx?n=45142&id=e9381817-0593-417a-8639-c4c53e2a2a10#

In the US this week it became apparent that DPI is in the sights of one of the federal agencies. The Bureau of Consumer Protection, headed up by a new Obama appointee

Prospects in the US Canada Market at the moment look very bad & as reported in other parts of this thread prospects in all the EU

countries also look bleak, but as always DYOR.

http://www.digestiblelaw.com/advertising/blogQ.aspx?entry=5949&id=1

SteveHUK

In reply to PengiPete (post #181) What an odd thing for the HamsterWheel to claim; that everyone using the NoDPI site has a pirate icon for their user ID. I just looked and it's simply not true that everyone has this. There are a lot of them but it's stretching the truth to say 100% do.

Clearly this is pithy of Hamster and not about the stock performance at all but makes you think doesn't it!

24th Jun '09

In reply to SteveHUK (post #186)

It's also annoying that HamsterWheel is allowed to refer to other people as pirates - pirates being theives and murderers - but saying that he eats too many blue smarties results in my post being deleted and me being threatened with being thrown off the forum.

For the record. I am not a member of NoDPI or any other group or organisation. I am BT customer and my late fatther was an executive at BT before he retired. My mother was also a BT employee for much of her working life. Nothing about me or my fanily warrants being referred to as a pirate by Hammy or anyone else. Neither I nor any member of my family is facing a possible prosecution - unlike Phorm and it's board.

The Icons were changed by nodpi members as a response to the SPP website (a form of mockery), the nodpi members also point out the SPP Website to either get a different point of view or to help confirm the veracity of their own statements.

bluecar1

yep, i selected my pirate icon with me guarding a treasure chest to represent "me guarding my privacy"

peter

Would I be right saying that the Stop Phoul Playing website is probably part of the total expenditure of Phorm on marketing and PR costs? And those costs have for a large part been incurred in an attempt to combat the campaign by these "privacy pirates"?

It doesn't seem to have worked that well does it? Total reported costs over $42m?

I'm looking at the file on here: http://www.investorschronicle.co.uk/Companies/ByEvent/Results/Inbrief/article/20090624/1cf85c58-6014-11de-a62e-0015171400aa/Phorm-burning-cash.jsp

Quote from above site: "The Aim-traded group saw sales and administrative expenses rise 46 per cent in the period to $42.2m, driven higher by an expensive publicity campaign defending its technology against privacy campaigners."

Seems like the expensive publicity campaign defending against privacy campaigners hasn't really paid back. The problem is, money can't overcome the flaws in the proposition can it? These "Pirates" don't seem to have ad to spend much at all, they just write the truth in places like this and Phorm struggles to show they have anything wrong in their analysis.........

25th Jun '09

Phorm's biggest claim is that their system doesn't collect personally identifiable information unlike Google and the other companies involved in behavioural targetted advertising. Everyone has heard the claim that but is it actually true?

I'm not talking about debating the way that a person can be identified from seemingly anonymous information. I'm talking about what Phorm themselves have to say on the matter - facts straight form the horses mouth. We are so used to hearing Kent Ertugrul's sound-bites and reading the various interviews with Ertugrul and his staff that we sometimes forget to go to the source and look at what Phorm actually claim to do. In this case it means looking a bit closer at Phorm's corporate website - Phorm.com.

This is how Phorm describe the information they collect - and the information they avoid...

What information does Phorm Service collect?
The Phorm Service is designed to avoid collection of any Personally Identifiable Information of the user ("PII"), namely information that can be directly associated with that specific person or entity, e.g. a name, a postal address, a phone number, or an email. Phorm Service uses only Non-Personally Identifiable Information ("non-PII"), such as search terms, URLs and keywords.

Hang on a minute...

Check that first line again "designed to avoid".

Is it me or that actually saying that Phorm will only try not to collect PII? It doesn't say that they won't or can't collect PII does it.

Okay, perhaps I'm being paranoid. or just being picky over that phrase Maybe it would help if I looked a bit further down the page. Okay, I've done that only now I've also found this...

How is the Phorm Service designed to not collect PII?
Phorm takes several steps in designing the Phorm Service to not collect any PII. For example, Phorm Service:

Does not collect any information on secure (HTTPS) pages
Ignores words or phrases containing the "@" symbol to ensure that we do not collect email addresses.
Ignores numbers longer than three digits, to prevent the collection of credit card numbers, phone numbers, social security numbers, or other numbers-based PII.
Does not store IP addresses.

If any PII were collected, Phorm would be legally obliged to use any information in line with the applicable laws concerning protection of such information.

That's better isn't it.

Now they are saying that they design the system to "not collect any PII".

Hang on another minute...

Run that last line past me again....

"If any PII were collected, Phorm would be legally obliged to use any information in line with the applicable laws concerning protection of such information."

If their system doesn't collect PII - as they stated at the begining of that paragraph - why would they then need to explain what will happen to any PII they collect?

It look like I wasn't being paranoid about that first paragraph. At best, Phorm will "try" not to collect information that can identify an individual - but they can't promise anything.

This is a company that has spouted it's privacy claims over and over for the last 18 months and yet I've never once hear or read any interview where Kent and his staff actually qualified that claim by saying "we'll try but we can't promise".

As a potential investor you have to double and triple check everything about this company. Even the most basic claims they make turn out to be spun to point where the truth gets buried.

Does that Buy note mention Germany & the reliance on a domino type effect for this company to be successful?

http://www.newstatesman.com/scitech/2008/03/tracking-behaviour

Published 27 March 2008

Quote:

Over in Germany, the constitutional court has just delivered a landmark decision on data privacy that backs up this instinct. In essence, the decision accepts an individual's online behaviour as an "expression of personality", an activity whose integrity and confidentiality are fundamentally protected in German constitutional law.

Please check this other Stockopedia thread which also discusses Phorm...

http://www.stockopedia.com/forum/view/30200/phorm-investors-thread

The author of both threads has now admitted that he has no evidence to support the claims made at the top of this thread.

HamsterWheel

The author has admitted no such thing.

Administrator

In order to give the participants some "time out" to reflect on the issues raised, this thread has been temporarily suspended. Likewise, any new Phorm threads will be suspended. We may reopen this thread in due course.

15th Dec '09

Seems this and the other Phorm thread have been resurrected.

The Astaire report on which this thread was based has proven to be as pointless as I said it would be. Not only have none of the predicted events occured, the company has lost all of it's UK partners, most of its Directors and the due dates for roll-out in Korea has passed without any sign of advancement.

The value of Phorm's shares has fallen from around 600 to just over 300 - though the latter is only the result of a rise last week that followed anither unsubstantiated rumour of a Brazilian customer. In between time the shares hit their all-time low at less than 100 and for most of the past six months have been wobbling at around 250. Last week's rise seems to have ended with no change today and only a handful of trades.

There was a speculation a few weeks back when an RNS announcement indicated that a large chunk of shares had changed hands but that seems to be down to the chahges at Llyods who owned shares spread throughout their various divisions. The recent sell-off of much of the bank meant a number of changes. Interestingly, whoever bought the profitable parts - the only ones up for sale - didn't take the Phorm shares. I can't help wondering who had first choice.

That brings us up to date - still no customers and still no income. Based on their published reports and knownspend levels, Phorm have less than £15m remaining and outgoings of £1.1m per month. If they carry on as they are they could survive another 12 months but it's reasonable to say that if they find a customer - even a on a trial basis - that spend level will rise. Bizarrely, finding any potential customer could make things even harder for Phorm as they would have to get to the roll-out stage very quickly - not exactly their strong point as their failed trials have all taken well over a year with the BT fiasco taking three years from start to finish.

A couple of points I should have mentioned that relate directly to HamsterWheel's post as thread starter and the Astaire report in general.

Firstly...

"There are a lot of odd types who really don't like Phorm at all, they congregate at a site called nopdi.org Per the buy note though, Astaire seem happy that Phorm has got them all well and truly on the run, even got a site to smear them a tad - www.stopphoulplay.com"

Phorm's smear campaign site was never updated by Phorm and has since been closed down and deleted.

The site was an unmitigated PR disaster for Phorm earning them ridicule in the press and turning previously neutral commentators against them and their products. What sort of person (other than HamsterWheel) thought it was a good idea for a company to attack members of the public and "smear them a tad".

Incidently, the "odd types are still around and the number of people from all walks of life who find this company, it's produts and it's business methods worrying has increased.

Another failed prediction.

Secondly...

It emerged that Astaire - authors of the report - employ Fairfax IS as their financial advisors and brokers.

In an interest quirk of fate, the CEO of Fairfax - Stefan Allesch-Taylor - is also a Director of Phorm.

It might be worth keeping that in the back of your mind when you read this or any future reports from Astaire relating to Phorm - not that I'm suggesting anything untoward you understand, just an extra piece of infromation that the more thorough investor may be interested in.

Regarding the report, can anyone point to any single projection or prediction in that report that has happened as the author expected or is even close to happening (even if slightly later than predicted)?

I have to say, I'm not impressed and I wouldn't use Astaire if this is any indication of their talents. If I were them I'd have pulled this a long time ago and produced something less biased and with a stronger grounding in reality.

Phorm - buy at £5.60, price target £20

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HamsterWheel

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