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Is Now The Time To Buy Blinkx Plc?

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Just when you thought things couldn’t get any worse for Blinkx (LSE: BLNX), it releases another profit warning. Indeed, after seeing its share price fall by 76% over the last year, Blinkx is down a further 15% today at the time of writing, following a hugely disappointing update that has left investors questioning the future potential of the company.

Despite this, Blinkx insists that it is now at an inflection point and that its long-term future remains bright. So, is now the right time to buy a slice of the Autonomy spin-off?

A Tough Six Months

Today’s update from the company stated that the weak revenues from the first quarter of the year continued into the second quarter. As a result, it expects to do little better than break even for the first half of the year.

This is hugely disappointing for investors who had been expecting Blinkx to report pre-tax profit of around £10 million for the full year. Even this expectation was well down on last year’s £17.6 million and was a major reason for the declining market sentiment that has been a feature of 2014 for Blinkx.

Cash And Mobile

Despite this, Blinkx insists that its longer-term future is sound. Its mobile division is gaining traction and, with around 18p per share of cash, it seems to have a sufficient cash balance with which to operate over the medium term.

The problem, though, is that investors are becoming extremely impatient with Blinkx’s performance and seem to be unwilling to allow any further slip-ups when it comes to the top or bottom lines.

A Lack Of Time

Indeed, this seems to be the key feature of being a shareholder in Blinkx. Since it is no longer a start-up business and has delivered a number of years of profit, all investors want to see are increases in earnings. They seem unwilling to buy or hold the stock based on what could happen in 2+ years’ time, rather they want to see Blinkx deliver strong bottom-line growth in the present.

In fact, who can blame them? Blinkx has a product that seems to work well, but which is struggling to deliver a viable (i.e. profitable) business. While it undoubtedly has potential, it doesn’t seem to have the time it needs to turn things around and, until it does, the company’s share price could weaken further.

So, while tempting to invest, it could be wise to wait for Blinkx to start delivering on its potential before buying shares in the company. Otherwise, a lack of patience from the wider market could not only hurt Blinkx’s bottom line, but yours as well.

While Blinkx may not be worth buying right now, The Motley Fool's Top Growth Share Of 2014-15 continues to offer generous upside potential.

The company in question has exciting growth prospects and trades at a very attractive valuation. As such, it could make a positive contribution to your portfolio and help make 2015 and beyond an even more prosperous period for your investments.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.