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Are You Brave Enough To Buy Bombed-Out Monitise plc & Lonmin Plc?

So many people had high hopes for Monitise (LSE: MONI) due to its early-mover advantage in a potential global boom area of mobile banking, payments and commerce networks, and its high-profile backers such as IBM and Visa Europe.

Being a first mover can turn into a disadvantage if you blaze a trail only to be trampled in the rush that follows. Monitise looked outgunned the moment Apple, Google and Samsung announced they were also looking at mobile payments. Apple Pay is now thriving while Monitise is desperately battling for survival.

Moni Worries

Investors who hoped that new chief executive Elizabeth Buse would save the company were disappointed when she escaped to the US, but confidence has already been torpedoed after partner Visa Europe announced it was planning to cut its 5.3% stake in the summer.

There are a few scraps of hope out there. This year, Monitise, has announced tie-ups with big names SocGen, Santander and most recently Telefonica, for which it will provide a cloud platform. I can’t help thinking that if these big companies are still signing up, there must be some hope of a viable future for the business, but with news thin on the ground I’d argue Monitise is too damaged to recommend today.

Tin Men

Investors in loss-making platinum producer Lonmin (LSE: LMI) have had rather too much news lately, all of it dreadful. The share price is down 65% in the last month alone but there has been some kind of rally – or most likely dead-cat bounce — in the last week, with a rise of 5%.

Loyal shareholders have a right to feel betrayed by its 46-for-1 £270m rights issue, but with the company fighting for its very survival there is little else it can do. A shocking $1.8bn has been wiped off the South African miner’s assets in the last year, due to rising costs and falling metals prices. No mining company has escaped this year’s brutal sell-off unscathed, but Lonmin is in a class of its own.

Metal Misery

Somebody is buying Lonmin, however. They haven’t been put off by the wildcat strikes by disgruntled employees, almost as worryingly, the employee dash to grab whatever redundancy they can while the money is still on the table. More than 3,000 have already taken redundancy or early retirement. High rates of wage inflation in South Africa won’t help, which Lonmin has to fund from its falling revenues. Productivity is flat or falling and with zero diversification, it is now at the mercy of events. Even the rights issue may not be enough to save it.

There may be a case to invest now if you think we are due an imminent revival in metals prices, but with commodity prices still falling, I’m glad to be out of it.

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