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Why Shares In Blinkx Plc Tanked Today

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares of internet media company Blinkx crashed this morning after warning that earnings would be lower than forecast. At time of writing the share price is down 45% at 36p.

So what: The AIM listed company saw a steep shortfall in earnings and revenue toward the end of the most recent quarter, blaming lower demand for its services (specifically its desktop search tool).

blinkxBlinkx said: “We attribute this performance to industry-wide issues of efficiency and effectiveness, which, in our case was compounded by the lingering effects of the disparaging blog.”

A blog, written by Harvard associate professor Ben Edelman, alleged that Blinkx used advertising software to “sneak” onto users computers and defraud advertisers.

Blinkx refuted the claims, but Edelman stood by his criticisms, stating “Blinkx seeks to make this a story about me rather than about their adware and their schemes against both advertisers and consumers.”

Now what: Blinkx’s revenues grew 5% year-on-year in the six months to July, but core earnings arrived $5m (£2.9m) below expectations. Blinkx shares, which were trading at over 200p in January, have since lost 80% of their value.

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Mark does not own shares in Blinkx.