Will Blinkx Plc Results Signal A Turnaround?

If you’ve held Blinkx (LSE: BLNX) shares for any length of time, you won’t need me to tell you what a volatile ride you’ve had.

But with full-year results from the video technologist due on Monday 18 May, the shares have started to pick up a bit, so is there a turnaround on the cards? There’s a long way to go before Blinkx regains its 2013 high of more than 230p, but today’s 37p does represent a 50% recovery in only a little over a month.

The year to March 2015 is expected to have brought in a bottom-line loss per share, reversing several years of rising earnings, as Blinkx is shifting its focus to a “strategy to pursue mobile, video and programmatic advertising, the fastest growing segments of the industry” in the words of CEO S. Brian Mukherjee in last month’s trading update.

Plenty of cash

At the same time, the day before the recent share price rise commenced, Mr Mukherjee told us that he expects to see revenue of “at least $210m” and adjusted EBITDA of “at least $3m“. With cash and equivalents expected to be around $90m, Blinkx appears to have plenty of cash to bring about its hoped-for return to profit growth.

In fact, the City is expecting the current year to just beat the break-even point, with EPS of approximately 0.5p on the cards for March 2017 — that’s still a long way from the 3.2p per share earned last year, but at least it’s the right direction.

Part of Blinkx’s move to programmatic (or automated) technology has been via acquisition, with Lyfe Mobile and AdKarma snapped up during the year. The firm’s goal is one of “completing a unified programmatic stack that is able to deliver on the promise of brand safe, cross-screen advertising at scale“, which I guess must be a good thing.

Is Blinkx a good bet now?

The biggest risk I see is that small cap growth companies that have captured a technological niche really need to move fast and exploit their first-mover advantage, before the big players with billions to spend muscle in on the market and do it their own way. At one stage Blinkx looked like it was doing exactly that, but it lost its direction and was slow to address the shift to mobile-platform advertising — which I still think was a woeful mistake.

So is it now too late for Blinkx, and is the latest refocus too little too late? It could be.

But on the other hand, there are some impressive users of Blinkx’s technology, including ABC, NBC, Reuters, Bloomberg and plenty of others — so maybe it really has captured sufficient momentum to keep on upwards.

Too expensive for me

Either way, with 2017’s two-year-out earnings forecasts suggesting a heady P/E of nearly 80, none of my money is going into Blinkx shares.

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Alan Oscroft 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.