Suresh Reddy Underrated?

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  • #6335
    Saul Goodman
    Registered Boarder

    1>

    Suresh Kumar Reddy is a first generation entrepreneur. It’s not easy to start a Rs.2,500 crore revenue company from scratch.

    As we all know he started online greetings company USAGreetings.com during the dot com bubble (also called tech bubble). After the dot com crash, all internet and related companies lost 90 – 99 % of their value. Mr.Reddy is very smart, he saw the opportunity in online/digital advertising and started Ybrant Technologies when everyone was skeptical on tech companies especially internet related companies(Before dot com crash everyone was interested in internet companies but after the crash no one was that interested).

    At first Ybrant technologies provided back end support to digital marketing companies but when they saw its future they wanted to be a front end Digital Marketing company and changed the name to Ybrant Digital.

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    #6336
    Saul Goodman
    Registered Boarder
    Topic Author

    Ybrant bought many digital marketing companies abroad. Some of these companies are :

    ORIDIAN, Israel (Online Media Solutions)

    • Investment – Rs.51 crores
    • Revenue (2019) – Rs.987 crores
    • Profit (2019) – Rs.190 crores

    Frontier Data Management Inc., USA

    • Investment – Rs.129 crores
    • Revenue (2019) – Rs.284 crores
    • Profit (2019) – Rs.70 crores

    DreamAd Group, Latin America

    • Investment – Rs.54 crores
    • Revenue (2019) – Rs.370 crores
    • Profit (2019) – Rs.78 crores

    International Expressions Inc., USA

    • Investment – Rs.104 crores
    • Revenue (2019) – Rs.110 crores
    • Profit (2019) – Rs.16 crores

    Max Interactive Pty Ltd, Australia

    • Investment – Rs.41 crores
    • Revenue (2019) – Rs.79 crores
    • Profit (2019) – Rs.16 crores

    As we can see these companies are making great profits for Brightcom compared to their investments. Especially ORIDIAN is making profit 4 times the money what Brightcom paid for them in a single year which is amazing.

    Mr.Reddy bought some of these companies during the recession. Here too he bought these companies when others were scared to buy anything because of the recession. This shows his brilliance.

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    #6337
    Saul Goodman
    Registered Boarder
    Topic Author

    3>

    Lycos

    Everyone forgets that Lycos was a very big company back in the 90s, it was very famous even before Google, Yahoo and other internet companies came.

    Lycos was sold to a Spanish company Terra Networks for $ 12.5 Billion in 2000 during the dot com bubble peak. But after the crash it was sold to Daum for just $ 95.4 Million (less than 2% of Terra’s investment).

    Ybrant bought Lycos for $ 36 Million in 2010 from Daum. I don’t know how much Ybrant was making then but Mr.Reddy said in a conference call that their business grew 2 or 3 times more and that was because of Lycos brand.

    Mr.Reddy bought Lycos for so cheap and used it to grow Ybrant’s business 2-3 times. That shows his brilliance and we should be very appreciative of him. Not everyone can do this.

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    #6338
    Saul Goodman
    Registered Boarder
    Topic Author

    4>

    Lycos LIFE

    Nowadays we can see everyone wearing smart watches. It’s a growing industry and all the big players are invested in it. Apple, Google, Mi all have smart watch division. Recently Google bought FitBit for $2.1 Billion. These companies are investing more in this.

    Mr.Reddy saw this way back in 2014-15 and started Lycos LIFE. Though smart watches were famous back then they weren’t used as they are used now. It received mixed reviews from people. Though it failed and they aren’t making it anymore they could’ve improved it if Brightcom was a bigger company. This shows Mr.Reddy’s vision.

    Many companies and famous business leaders have failed trying to launch a new product.

    1. Some of Apple’s failed products are Pippin, Newton, LISA etc.
    2. Some of Microsoft’s failed products are Windows Mobile, Zune, Vista etc.
    3. Some of Amazon’s failed products are Fire Phone, Amazon Tap etc.

    If these companies can experiment and fail then why can’t Brightcom ? People were criticizing Mr.Reddy for Lycos LIFE’s failure. It’s not like they quit Digital Marketing and started Lycos LIFE. They still are making more money in Digital Marketing and growing.

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    #6339
    Saul Goodman
    Registered Boarder
    Topic Author

    5>

    Artificial Intelligence & Machine Learning

    We all know how important AI & ML are. Mr.Reddy knows this and he started AI & ML business. Though he mentioned they are taking it slow at present and revenue contribution from it is negligible, but eventually when the opportunities come they’ll start scaling it.

    AI has great applications in Healthcare, Agriculture, Finance, Security , Gaming etc.

    Now with COVID-19 pandemic, the use of AI in healthcare will grow. To prevent future pandemics and to improve research on other diseases like cancer, AI will play a bigger role.

    Another field is agriculture. Check Israel for example, when they had water scarcity in the past, they used AI in agriculture to grow crops using less water. Now Israel has sufficient water for their needs and AI played a big role in that. Israel continue to innovate in technology. Brightcom has a big presence in Israel.

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    #6340
    Saul Goodman
    Registered Boarder
    Topic Author

    6>

    Mr.Reddy is a very humble and honest person. He answers all the questions patiently in the conference calls. Sometimes people ask him silly questions but still he answers them politely.

    There is no requirement to conduct investor conference call as per SEBI. Many companies don’t conduct that. BCG is conducting conference calls every quarter and has not cancelled it till now.

    The IndUS Entrepreneurs (TiE) is a Silicon Valley non-profit supporting start-ups through networking and the raising of capital for new and experienced entrepreneurs. Mr.Reddy was the President of TIE-Hyderabad chapter from jan-2019 to Dec-2019. This shows Mr.Reddy is well respected among his peers. They won’t appoint a person who doesn’t deserve that post.

    He is a very learned person, you can see his articles on newspapers like Hans India and other websites. You can check his social media profiles too where he posts good articles on tech.

    We should start appreciating him more instead of blaming for the fall in stock prices (I’ll try to explain why the price fell, in my perspective in a separate post). He doesn’t have control over day to day price changes. We should be lucky to have him as the CEO of Brightcom.

    At first, he focused more on business than the valuation and share prices (though he never treated shareholders bad). He thought if the business does well the share price will also do well but people didn’t support him. It’s mainly because people didn’t & still don’t understand Brightcom’s business (Some think BCG is an IT company and others think it’s a search engine). They don’t know how Digital marketing works. All they care is only about share prices. They never bother to know about the business.

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    #6341
    Saul Goodman
    Registered Boarder
    Topic Author

    7>

    Just because the share price is low it doesn’t mean that the business is not growing or the business is fake.

    Till now VCs have invested $100 Million in Brightcom(Ybrant). They must have seen Mr.Reddy’s business acumen and decided to invest. They wouldn’t have invested if Brightcom was a fake company. Daum wouldn’t have sold Lycos to Brightcom if they knew BCG was a fake company.

    Brightcom (Ybrant) wouldn’t have bought companies like ORIDIAN, DreamAd etc if Brightcom’s accounts were fake. Oak still hasn’t sold its shares ( though they will in the future and that’s because they are closing their fund completely).

    People are spreading fake news and information on boards like moneycontrol and if anyone gives them a proper reply they start deleting those replies.

    Same case on social medias too, when a person posts fake information or negative comment and if we counter them with a proper argument based on facts they won’t argue with us anymore or they start giving nonsensical answers. Their main intention is to spread fake information about the company.

    We should ask them proof for their arguments. They’ll only say how can a company making 450 crores profit trade so low and say the profits are fake because they aren’t giving dividends. This is the most foolish argument I’ve seen.

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    #6342
    Saul Goodman
    Registered Boarder
    Topic Author

    8>

    Amazon, Facebook, Google, Adobe Systems, Autodesk, Ebay, Netflix, PayPal and other tech companies haven’t paid dividend till now. Even The Trade Desk doesn’t pay dividend.

    Google’s profit in 2019 was $ 34 Billion (Rs.2.55 lakh crores) and they haven’t paid dividend till now. Does that mean Google’s profits are fake and it’s a fake company? They would rather use that to grow their business.

    Brightcom is also doing the same, they are using all the profits for growth but they are having cash flow issues, let them get that LOC and grow more, then they’ll start paying more dividends. If they start giving now it won’t be of great use because they have to pay Daum and close off bank loans.

    Nowadays BCG is improving their communications with the shareholders and as Mr.Reddy said the company is at an inflection point.

    (These are my views and everyone has their owns opinions).

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    #6343
    admin
    Keymaster

    Thanks Saul!!. Made the Sunday morning so refreshing.

    Steve Jobs once said, “To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.”

    In an investment, it is so important to understand the characteristics of the entrepreneur – the jockey and you have explained with utmost respect .

    Looking forward for more.

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    #6344
    odysee
    Registered Boarder

    Thank you very much for this informative yet concise factual perspective on the company and it’s brilliant promoter Mr Suresh Reddy. We all have, over the years, tried to piece together this journey of what is now the Brightcom Group, and even though the data available and regular conference calls gave us some perspective and encouraged us to keep the faith, this is the first time it has been put together so lucidly. My grateful thanks to Saul Goodman for reinforcing my belief in Mr Reddy and his team, and the encouraging prospects that are becoming increasingly visible for BCG.

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    #6355
    srinivasa kumar
    Registered Boarder

    Thank u very much Mr. Saul Goodman..commendable..great job

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    #6356
    m4max1979
    Registered Boarder

    All this is good Mr. Saul Goodman. But by the looks of it, it does not seem like you have been invested in this scrip for a long time. Had you been invested around six years back, all the above achievements and qualities of the promoter and the company would not have mattered much as you would have gone through the pain of seeing you investment take a deep dive in red and you would have gone through the pain of getting absolutely nothing from the company regarding issues faced by the company. Just timelines again and again and again and commitments broken again and again and again. You would have seen how the cmp was manipulated systematically to drag it down to low single digits. Do you think a good promoter would have let that happen to his company? A recent example, Ashok Leyland did not make a single sale in march/ april and yet its cmp is above its book value. Now pls do not tell me that it was due to daum and other BS issues, I have seen how resilient companies fight when their cmp slides downwards. I can assure you, BCG made no such attempts when their cmp was going down.

    I am sure most investors like me who invested when the price went up in 2014 know all the positives about the company and promoter. That being said, for an investor a company and its promoter are only as good as the return on their investment. For all his good qualities, I can assure you that Mr. Reddy cannot even begin to fathom the pain he has caused his retail investors like me.

    Sorry to be a spoiler on a Sunday but believe me, you can share all the info about the good and very good things about the company and the promoter. Believe me, we already know all that. Me and I am sure a lot of people like me would only begin to trust the company once we atleast go in the green and the company has a long way to go for that.

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    #6357
    Srd.rdx
    Registered Boarder

    You nailed it m4max1979!

    They say..

    Bhav bhagwan che. It remains a junk unless mr entrepreneur mends his ways.
    It’s indeed a tiger …but so far paper tiger.mkt does not believes the number so is it’s current price.

    Have seen enough of drama since last 6 years.

    Hoping drama will end soon..not too many episodes left.

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    #6358
    odysee
    Registered Boarder

    M4max1979, I would generally agree with the sentiments expressed by you. I, also, invested around the same time as indicated by you, and have experienced the fluctuating hopes and disappointments over the last many years. But the discussions during the conference calls kept the faith alive and one stayed invested. The comments by Mr Reddy on dispensing with the ‘legacy’ issues to make the company debt free and the clarifications on the pending Daum issue over many conference calls indicated that the company was battling with a pretty vexing matter with a determined opponent.
    The turning point in my view was in March 2019 with the US court decision, which enabled the company to finally accelerate the potential settlement with the owners of Lycos inc.
    The very fact that we all have stayed invested through this entire frustrating period of the last 6 years indicates that we have kept the faith and believe that at some point in the not too distant future we will be rewarded with a realistic market price that will be way above this current dismal prevailing value.
    The consolidation exercise of the US subsidiaries and appointment of a top international accounting and audit firm, namely BDO, are recent developments and bode well for all stakeholders.

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    #6359
    VALUEBUYER001
    Registered Boarder

    Dear m4max sir ji , I understand your pain as I am also invested in BCG for more than 4 years . Just wait a few weeks we will see good news and price and positive environment. I feel good times ahead for brightcom group share. We are going to see the light as we moving to the end of the tunnel.let us hope for the Best

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    #6361
    m4max1979
    Registered Boarder

    I meant no offence to any of my investor friends on this forum. Its just that I have been invested in this scrip for a long time now and at the time of investing ended up investing a little too much in the beginning. I have been keenly watching this scrip for a long time now and am aware of its entire history right from listing to the current new developments that are taking place and the true potential of this company.

    However, if I were to be asked to trust the promoter. Well that is not gonna happen. He has promised a lot of things and he has not delivered till now. Let me elaborate on this and try to drive to the point I am trying to make.

    Point 1:
    Daum case was thrown out last march. It has been 14 months since then. A company which cannot afford to pay even small loans (Total less than Rs. 30 crs, Axis Rs. 11 crs, Canara Rs. 16 crs and SBI – around Rs. 3 crs) from banks considering its own profits, how can it afford to keep US lawyers on its payroll for over a year trying to draft a legal settlement agreement. It simply does not take so much time by any measure.

    Point 2:
    Does anyone even know what is happening with Axis Bank settlement? How much they are asking now and what is the company doing to arrange the funds.

    Point 3:
    Has the company ever given a complete breakup of usage of pref. allotment and timeline in which it will be used?

    Point 4:
    BDO audit: Why is it pending for such a long time. Pls refer to the concal in november, promoter ahd said two to three months at the latest. Have they ever bothered to inform the investors about the status?

    I have been emailing the above queries and many more for quite sometime now but as usual, no response.

    The point I am trying to make is that over time I have come to a firm conclusion that all the above points have been deliberately left open. Promoter will take his own sweet time to resolve them. This scrip will move up only when the promoter wants it to move. And for people who are ecstatic over the UCs now, this happened in March 2017 on the back of rumours that daum case was going to be closed and the cmp rose to 10.1 only to go back to fresh lows in two months.

    As for the comment by Srd.rdx, bro market sentiment does not have such a deep impact on cmp of promoter driven companies. If promoter wanted, this slide from 68 to 2.45 would never have happened in the first place.

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    #6362
    odysee
    Registered Boarder

    m4max1979 @6361, you have enunciated very relevant points, which frankly I was deliberately not highlighting. A measure of disquiet has always been prevalent, but one has tried to focus only on positive developments or grasped at straws indicating swift resolution of pending issues ( example being the clearance of dues of all three banks through OTS within a few months of the then intimation- May 2019).
    I trust Mr Reddy will read all these posts.

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    #6365
    Saul Goodman
    Registered Boarder
    Topic Author

    1>

    Hi m4max1979, the views expressed by me are my own and I’m not forcing you to agree with me. I too have invested in the company for a very long time.

    Like you, I too am frustrated by the decline in stock prices. I too am frustrated when the CEO gives timelines and doesn’t execute it. As you know he has control over some things and not on all. For ex. If all went well he was supposed to go to South Korea to close off Lycos case with Daum. He didn’t go because of COVID-19. Would you have wanted him to go there and close the deal risking his life?

    You have mentioned that you bought Ybrant/Lycos/Brightcom when the prices went up right?

    My question is why did you buy looking at the price alone, didn’t you analyze the business, it’s positives and negatives, credibility of the CEO and management before buying?
    If you don’t mind me asking, does stock prices going up mean that it’s a good company and falling stock prices mean it’s a bad company?

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    #6366
    Saul Goodman
    Registered Boarder
    Topic Author

    2>

    You are saying that the CEO is not doing enough to the company and its stock. Well I don’t agree with you completely, I may agree you with you partially depending on the circumstances.

    And I won’t tell you the reason for all this is Daum. Daum is a part of the problem but it is not the only problem. Though it’s impact is big and its effect on the price is huge there are other problems the company is facing.

    For example everyone knows Brightcom has a presence in many countries. They grew by inorganic expansion. Every country has its own rules and regulations on conducting business. You can’t raise fund in a country and send that money to a company in a different country. There are many restrictions to do that and it depends on the trade agreement between those two countries.

    That is why they are consolidating all their subsidiaries and forming an entity in the US. It’s easier to get funds there since they do most of their business there. This takes time and it depends on the size of the company (bigger companies can do it quickly and smaller companies take time).

    Regarding auditors, BCG is appointing a big auditor, I know this is taking time, maybe we should ask him in the conference call about this.

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    #6367
    Saul Goodman
    Registered Boarder
    Topic Author

    3>

    Brightcom like other small Ad Tech companies is having receivable issues. If they demand their partners to pay up sooner then they may lose their customers. Big companies like Google, Facebook and AOL can do this because of their size but Brightcom can’t afford to do that and lose customers. You can understand his problems, he needs funds to grow but the stock price is low and there are complications in raising debt so they are going for a receivable financing.

    You can ask why they have issued preferential shares and diluting the company. Well, all I can say is Mr.Reddy tried to avoid it as much as he can( I’m not making it up, he himself told us about this in a conference call). Maybe he wanted to close the bank loans sooner. We should ask him what other plans he has with that money in the next conference call.

    Coming to bank loans, I don’t know what agreement they have made with the banks and I too have questions on the delay in announcing the removal of charges on the company on MCA website. We can’t say it is only the company’s fault, banks too may have delayed it.

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