Click Here

the Preview Stock blog

more than just finance and business

the Preview Stock blog header image 2

Burst Media (BRST.L) - profitable, but barely so

September 12th, 2007 · No Comments

A glance at Burst Media’s (BRST.L) most recent earnings report doesn’t paint the rosiest of pictures.  Granted, the company turned in a profitable first half of the year, but at a not-so-amazing $279,000.  No, I didn’t lop off any zeros.  Year over year revenue growth is expected to come in at a fairly anemic 5-9%; again these numbers are not earth shattering for an internet company in a high growth sector.  Shares which had bottomed out last year, remain mired at low prices.  Shares fell 20% today from 17p to 13.5p (market cap of £11.20M or US$22 million).  That’s the equivalent of about 27 cents a share. At its highs a year ago, shares were trading at nearly 90p.  Again, it makes me wonder why they just don’t take the company private.   I mean $22 million is a pretty damn cheap price for an established profitable internet ad company;  especially given what Yahoo, Google, AOL and Microsoft are paying for companies these days.  Blue Lithium was just bought by Yahoo for $300 million.
The bright side is that the company continues to be profitable, ensuring its continued existence in the market place.  Good for me.  24/7 Real Media, which was eventually bought out, was never really profitable either.  Below are some articles from the financial press to give you an idea of Burst’s struggles.

On a personal note, yes I am biased in favor of Burst Media…
the company recently came thru for me, and sold a targetted campaign for my entertainment website (westlife.org).  It’s been years since they’ve been able to do that.  And the client is a damn respectable one…Clinique.  If there’s one great thing to be a Burst publisher, it’s the high ad quality (except those pesky ads from adtegrity that are worth s***).  In addition, they recently changed their payment terms from net 90 to net 45.  I never could understand the net 90.  It meant that publishers had to wait 120 days from the start of a campaign month to get paid.  Anyways, I digress…click thru to westlife.org …the Clinique ad is a can’t miss.

LONDON (Thomson Financial) - Burst Media Corp swung to a first-half net pretax profit but said it expects its full-year performance to be below market expectations, mainly hit by higher than anticipated ad campaign cancellations.

It reported a net pretax profit of 279,000 usd for the six months to June 30 compared with a 703,000 usd loss the year earlier, as sales grew 17 pct to 13.30 mln usd.

The company estimates revenue from the Burst Network will increase 5-9 pct for the 2007 fiscal year as compared to the prior year. Slightly offsetting the softness in revenue growth is projected triple digit revenue growth for Burst Direct and Burst AdConductor.

For the year to December 31, the company expects to report total revenue between 28.5-29.5 mln usd, which will lead to adjusted EBITDA of about 2.4-2.7 mln usd.

And another article….

LONDON (Reuters) - U.S.-based online advertising firm Burst Media (BRST.L: Quote, Profile, Research) said on Wednesday results for 2007 are likely to come in below market forecasts because of higher-than-expected ad campaign cancellations.

Burst, whose share price dropped 60 percent when it warned on 2006 profits almost a year ago, just five months after it floated, said it expects revenue of between $28.5 million and $29.5 million for the year to December 31, 2007.

AIM-listed Burst now expects adjusted earnings before interest, tax, depreciation and amortization of $2.4 million to $2.7 million, it said.

House broker Altium Securities had previously expected adjusted pretax profit of $4 million on revenue of $31.4 million.

The ad cancellations “appear to be a function of heightened competition as high profile players including Google and Yahoo look to increase their exposure to the fast growing online advertising space,” said Altium analyst Roddy Davidson in a note as it cut its recommendation to hold from buy.

Burst said the cancellations had happened since the company issued a trading statement six weeks ago which said it expected to meet 2007 expectations.

The firm also posted half-year results on Wednesday which were broadly in line with Altium’s expectations.

Tags: Stocks