Today I am looking at three gruesome technological plays.
Monitise
Shares in payment processing specialists Monitise (LSE: MONI) continue to languish around the record lows punched late last month, and I believe further pain could be in store. Currently rudderless following the departure of Elizabeth Buse in September, the tech specialists have a long way to go to reassure the market given a backdrop of intensifying competition.
Monitise’s position at the forefront of the mobile payments segment looked set deliver stunning earnings growth, particularly on the back of surging e-commerce. But since then the likes of Apple and Google have upped their game in this most lucrative sector, while Visa’s decision to cut its ties with the firm and go it alone came as a further bodyblow to the business.
In addition, Monitise’s decision to bin the development of bespoke applications in favour of creating generic client software casts further doubt over the appeal of their products. Even though the business inked a new development deal with Telefónica this week, the company still expects revenues growth to remain elusive until the end of 2016 at least. I reckon Monitise faces too many obstacles to justify investment at the present time.
Quindell
Compared with Monitise, telematics specialists Quindell (LSE: QPP) has seen its share price remain relatively calm in recent months. Still, I believe there is still plenty of intrigue surrounding the firm that suggests the worst could be far over.
The Hampshire business certainly cannot be accused of sitting on its hands following the damage of the past year, the firm overhauling its board in a bid to expunge memories of former CEO Rob Terry and the ‘strange’ share dealings that took place. But Quindell — which is also planning to change its name as part of its reputation-building drive — still faces a Serious Fraud Office probe into its previous profit overstatements.
And looking ahead, I am unconvinced by how exactly Quindell will generate revenues in the future. Sure, the field of telematics promises to be a huge growth sector in the years ahead. But the sale of its revenues-driving Professional Services Division to Australia’s Slater & Gordon leaves Quindell with nothing more than a cluster of small insurance specialists, leaving many to question the firm’s near-term outlook and possible survival. New CEO Indro Mukerjee certainly has his work cut out for him to convince investors of his turnaround plan for the firm, and I for one am not buying.
Blinkx
While differences can be made between the growth stories of software specialists Blinkx (LSE: BLNX) and Monitise, it does not make the former a purchase in my opinion. Rather, while Monitise was once a forerunner in the field of online payments, Blinkx — whose applications allow users find online videos more easily — was late to the ‘mobile’ party, a critical mistake for its growth prospects.
Although Blinkx is much more tuned into users’ modern viewing habits — mobile revenues almost tripled during the 12 months to March 2015, to $41.4m — the firm still has a lot of ground to cover to get sales chugging resoundingly higher.
Following a profit warning back in August, Blinkx advised earlier this month that it expects revenues for April-September to clock in at just $90m, a serious slowdown when you consider the top-line clocked in at $215m in fiscal 2015. And the business expects to record an adjusted EBITDA loss of around $7m for the period.
With the company’s transformation plan still to deliver tangible rewards, not to mention sucking up vast amounts of capital, the City — like myself — does not expect Blinkx to flip into the black any time soon.
