Shooting_star - I think there could be a problem with Burst management credibility.
They debuted on AIM in April raising £2m at 82p.
They issued this trading update on July 20th
Burst Media Trading Statement
Following its admission to the Alternative Investment Market on 21 April 2006, Burst Media, the international online advertising services Company, is announcing an update on trading ahead of the announcement of its results for the half year to 30 June 2006 scheduled to be announced on Monday 18 September 2006.
Highlights for the first half include:
The total number of monthly unique users reached by the Company in the U.S. increased to 79.0 million in June 2006 from 62.5 million in December 2005 (+26.4%) according to comScore Media Metrix. In the U.K., the company’s reach grew to 9.6 million unique users, up from 8.6 million in December 2005 (+11.6%);
Total number of Burst Network web publishers at the end of the first half was approximately 1819 operating over 3600 web sites;
Successful launch of new Burst Direct division in April 2006 and at 30 June 2006 it had approximately 750 publishers operating over 1740 web sites;
The Company has received new AdConductor™ orders from Tremor Networks (www.tremornetwork.com) and F&W Publications (www.fwpublications.com). AdConductor continues to generate a high level of interest and the pipeline of prospects for this business remains strong;
The Internet media market has continued to grow ahead of other media sectors and Burst Media’s performance is consistent with market trends. The Board is pleased that it has been able to maintain gross margins and is particularly encouraged by its performance in the UK where growth has been exceptional.During the first half of the year, the Company has made significant investments in the establishment of Burst Direct and the ongoing development of AdConductor as well as in new sales people and office infrastructure, and the Board expects the Company to benefit increasingly from these important investments in the second half. Overall, Burst Media continues to enjoy a well-established position in its core markets and is confident of meeting market expectations for the full year.
Commenting, Jarvis Coffin, Chief Executive, said: “We are pleased with our overall trading performance in the first half during which time the Company floated on AIM, launched its new division, Burst Direct and significantly increased the size of its staff. The management and Board remain convinced about the prospects of Internet advertising. Despite some slumping forecasts for global advertising generally, industry analysts continue to maintain their very positive outlook for Internet advertising. We look forward to continuing to benefit from the investment we have made in the business to date and from the pipeline of new business which is strong. As a result, we therefore anticipate meeting our goals for the second half of the year.”
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On Sept 18th (just 9 weeks later) they published their interims showing that EBITDA was 27% down on the prior year. The CEO stated "We are extremely disappointed with our results versus our expectations and regret having to confront our investors with such shortfalls" He then blamed the shortfalls on additional costs associated with the expansion of Burst Media. The shares dropped by 80% to 15p over the next few days !
How come he didn't know about these additional costs when he issued the trading update just 9 weeks earlier ? Doesn't he know what is going on in his company ? You would expect a CEO to be extra vigilant about the companys performance during the first 12 months following an IPO.
Internet advertising is clearly a growth sector but the brief track record of this company since it debited on AIM hardly inspires great confidence. I would be interested in your comments on this !
