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How RhythmOne Could Change Investor Fortunes At Blinkx Plc

In early February I thought shares in Blinkx (LSE: BLNX) might have reached an inflexion point — after a big fall, the share-price could have gone either way, I reckoned.

Back then, the firm’s balance sheet cash balance sat around the level of the share price at 30p. With the directors sounding upbeat, the prospect of a reversal in fortunes for Blinkx seemed like a real possibility.

Today the shares sit at 32.5p. We are still waiting for share-price progress, but today’s announcement about the launch of RhythmOne could be the start of better times ahead for both the company and its shareholders.

What is RhythmOne?

Blinkx is unifying its brand advertising trade entities under a single brand — RhythmOne. I’m all for simplification and, with luck, an easily accessible ‘handle’ will attract customers to the firm’s offering.

Blinkx hopes the brand unification will augment the company’s ability to deliver on the promise of cross-screen advertising, at scale, across what the firm describes as “a consolidated, quality supply footprint”. A company bringing its products and services together like that, and getting behind them with a concentrated push, sounds like a company on the right strategic track to me.

The directors reckon RhythmOne covers a fully integrated range of formats including desktop and mobile video, rich media, display, social and native advertising formats. The important point is that RhythmOne advertisers will be able to reach an expanded, high-quality, target audience through a single access point — it makes sense for any company to make itself as easy to do business with as possible.

Technological and brand evolution

The firm’s chief executive reckons this new consolidation represents significant technological and brand evolution for Blinkx.  He says the rebrand is the initial, public-facing manifestation of  recent integration efforts that combine sales, marketing, technology and operations teams across the company.

We’ll have to take his word for it, though, because Blinkx is right up there at the top of the list of firms with impenetrable business models that lack visibility for private investors like us. At least, it is for me, and that’s a barrier to investment.

That said, I can see the basic value in Blinkx now, supported as it is by its cash pile. The big question is how quickly the firm can migrate from loss-making back to profitability. I hope it’s a fast process so that the company doesn’t eat too much of its own cash. Maybe, just maybe, this RhythmOne initiative is the watershed that signals a turn in fortunes for Blinkx.

Despite the firm’s lack of earnings visibility, if I were tempted to invest the share-price action would guide me. Often, share prices lead events on the ground, so if an uptrend starts to develop there’s good chance that operational progress will follow, so an uptrend could be a good time to take the plunge with Blinkx.

Blinkx is tempting, but so is another small-cap company our analysts are excited about. In a special wealth report called 1 Small-Cap Stock Flying 'Under The Radar, the investment team sets out a good case for a firm in another sector that seems set to do well. You can find out more by clicking here.

Kevin Godbold 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.