[Logan]

Now that Disney Plus is trying ads, how long until the rest of the streamers do, too?

More streamers may try to hybridize their services

Disney+ (which owns Hotstar also), one of the biggest streamers, will have ads on it’s platform from this year and other streamers could follow this.

This is a great news for ad-tech companies. Recently even Zoom and Uber also started this. With CTV growing and traditional cable TV being replaced, ad-tech companies can have many options.

Companies can’t keep growing with only subscription plans and eventually they’ll have to start a hybrid plan which includes ads.

Talking about technology, few years back everyone had DVD players in their houses and nowadays almost no one has them. Do those DVD players still have the same value and utility now?

Will anyone buy a DVD player and also buy CDs and watch movies or TV shows now using them? or will they just click a button and stream the same movies, TV shows on any streaming platform?

(I don’t think people will take a DVD player even if someone gives them for free)

Even if some people want to watch movies using DVD players, how many companies are actually making CDs compared to the past?

What happens to the DVD player? Do you write them off or still think they carry the same value when you bought them? It may get some scrap value (for it’s weight not because of utility). DVD player being a hardware device may have scrap value for it’s weight but what about a software product or a tool or a media space with no one visiting the website. Will advertisers be excited about placing ads on a website with zero visitors?

[Logan]

All these days I thought he had sold shares which were not even allotted to him. Maybe in the world of naysayers he must’ve sold his shares but what to do reality is what matters. I think two days back when he tweeted something about exiting a position some people started rumors saying that he sold his BCG shares. These people pretend to know everything about everything but they didn’t know that he wasn’t even having shares. Just shows how informed they are and how desperate they can get.

This news is a confidence booster. He easily could’ve paid the money after all the dust settled but he chose to do it now or he simply could’ve forgotten about it altogether and could’ve written off his investment.

Now after seeing this news some people are saying that he paid the money only to dump it now because he’s in profits. Man, what do these people really want? Are they so desperate and against a company/person that they don’t mind peddling fake news and forget what’s the reality? I don’t know what they get from it. This much negativity is not good for anyone.

Mr.Sharma can’t sell his shares immediately because they have a lock-in period. PW allottees had lock-in periods, FPIs also have and any person/entity that subscribes to warrants or preferential shares will have lock-in periods.

[Logan]

Yeah, we all are missing @rathi_b and the Hyderabad team. They gave us so much confidence during very tough times and it’ll be great to hear from them now.

[Logan]

Instagram officially discontinues standalone IGTV app

Instagram (owned by Meta), one of the largest social media companies is discontinuing IGTV. Should they write off this asset or continue showing it as an asset in their books? Whatever they invested in that becomes useless if no one uses it. Now Instagram is investing heavily on Reels.

The company thought it could compete with YouTube when it started IGTV but it failed. Instagram was slow in short videos and tik tok took advantage of that. This is how brutal the market is. Everything changes so much and you have to be innovative to stay competitive.

Instagram is starting a paid subscription model now. Reels is not high margin.

With all these, the companies have to worry about different rules and regulations too (like GDPR). Big companies have paid billions of dollars in fines when they didn’t follow those rules and regulations.

The technology that is there today will become obsolete tomorrow. BCG started Brightcom video player and if it works out then good but if it doesn’t then they’ll have to write it off. If they don’t try they can’t grow and compete and later lose to their competitors.

[Logan]

‘GDPR to benefit consumers, Net firms’

(June 19, 2018)

The General Data Protection Regulation (GDPR), enforced by the European Union last month, has cleared the ambiguity on privacy, and would benefit consumers and firms worldwide, said Brightcom Chairman and CEO Suresh Reddy. Besides being a threat to Google, Facebook and Whatsapp, the data privacy law had prompted staff training, change of codes, alteration of information flow and purchase of newer equipments across IT firms, he said, speaking to The Hindu over the phone.

“The ambiguity over the usage of information and privacy has gone. We are compliant with the new law and are helping non-compliant clients to suit the new requirements,” Mr. Reddy said. Saying that stricter privacy laws were expected to hit the market, he added, “The US, Australia and Singapore are watching the GDPR implementation. It is expected to be a template for them to develop their own versions.”

[Logan]

The main reason for this negative reaction is because of informing the market after 5 months. BCG always had doubters and this incident didn’t help the situation.

Technically they should inform the markets/exchanges/shareholders once the intimation for the audit is communicated, that is, confirming that the audit actually takes place than just saying we will audit you but not confirming. The company and the regulator will communicate with each other and then the regulator will take the necessary action
But as a measure of good corporate governance they should’ve shared the details in September itself.

I’ve always been critical of the company’s corporate governance and everyone knows about it. They make simple matters go to extreme. I’ve asked the CEO directly about this topic too in the conference calls. I had even suggested the company hire a board member who’s an expert on topics related to stock markets and that person would’ve properly guided the company in these matters.

[Logan]

I request everyone to send mails to the company asking them to arrange a conference call ASAP (ideally within this week).

The next quarter earnings call will be in June and we’ll have to wait till that time to talk to the management people. Many things can happen in that period and it’s better if they talk to shareholders now and allay concerns and give more clarity.

[Logan]

Asset impairment is common in product based companies and I’m sure Deloitte will understand that. Even Tata Steel, Tata Motors impaired assets worth tens of thousands of crores.

Being a holding company that has many subsidiaries, there’ll be more related party transactions and some will see it as a negative which really isn’t if people understand the structure of the company. All the bank debts were paid by the company which it received from the subsidiaries which were taken as unsecured loans. The other alternative is that the subs pay dividend to the parent company which will be taxed. Most of the companies take loans from their subs or subs take loans from their parent company.

The problem with these type of audits is that we’ll not know the duration of it. Suzlon had a forensic audit last year but the price was in single digit so that didn’t have much impact. Sun Pharma also had a forensic audit done. These things won’t matter to large cap stocks whereas for small caps we can’t know the impact. Some company named Binny Limited also had a forensic audit intimation by sebi in November and it didn’t have much impact on the stock.

The management should be more proactive and should engage with the shareholders regularly and allay concerns. Maybe as @brightspot mentioned, they should arrange a conference call or the CEO should go on live TV and clear confusions.

[Logan]

At this point it’s all speculation and guesses and only the company or sebi can give any clarification. Doubt that sebi will do such things so it’s the company that has to inform the market/investors about this.

In the notification section in NSE, it is mentioned as “Brightcom Group Limited has informed the Exchange about Forensic Audit Assignment” so going by this it’s the company that has shared this information but if we refer BSE notification then it looks like BSE has shared this.

[Logan]

The forensic audit is mainly for the impairment of assets and this is common in product based companies.

The problem is with the company not reporting it to the shareholders and the market. Whether it is serious or not, they should report/inform the market about these things.

We should all write mail to the company asking them to explain this.

[Logan]

@whyshares, I think preferential holders will have lock-in period for bonus shares as well. Some PW holders were allotted shares before bonus shares were issued and they still have lock-in periods.

One example – when BCG released SHP on 1st July-21, PANKTI COMMOSALES LLP had 1cr shares (pre-bonus) locked-in and now they have 1.25crs shares locked-in.

[Logan]

I think @hw_tw has covered all the topics very well so I’ll skip similar queries.

To the CEO

Congratulations on a great quarter. This was the company’s best quarter ever and we look forward to seeing this record broken in the coming quarters. Thank you for taking decisions and initiatives that have benefited all the stakeholders. Please convey our thanks to the management team, directors, employees of the company.

Queries

1) How important is first party cookies now that third party cookies are being phased out? Is this development good for BCG? Do you expect SSP business of BCG to benefit from this change?

2) Do you have plans to revive the company’s IoT business?
As you predicted many years ago, augmented reality and recently metaverse are gaining more popularity which should benefit IoT companies.

3) Do you expect streaming giants like Netflix, Disney+ and Amazon Prime to start advertisements on their platforms? Since they can’t expect their subscriptions to keep increasing forever, they’ll either have to increase the prices or start putting ads on their platform to make more revenue.

4) Can you appoint one auditor to audit most of your businesses. The comments from the current auditor saying they haven’t audited the subsidiaries individually causes some confusion to less informed people. We understand the process and we don’t have any complaints but it’s just a suggestion.

5) When do you expect the acquisition process of MediaMint to be completed? Will it be done before this financial year (March end) or will it take more time?

6) How is Indian ad-tech market different from Western markets.

7) If time permits can you explain the benefits of augmented reality and metaverse for ad-tech companies like BCG.

8) Update on AI&ML business. Has there been an increase in this business like the ad-tech business?

To the CFO,

1) There are some old tax disputes mentioned in the annual report. Can you please provide some information on that.

[Logan]

Even I didn’t get any link/mail for the AGM and the only mail I got was for the e-voting. Since I was very busy all these days, I forgot to vote. Can someone please record the AGM and share it with us. It’ll be very helpful for those of us who can’t attend the AGM.

[Logan]

@hw_tw, thank you for taking the time and effort in preparing these excellent questions. You have covered every topic perfectly.

@admin, this is my list of questions. I have left out the ones which are similar to @hw_tw’s.

To the CEO,

Congratulations on a great quarter. On behalf of all the shareholders we would like to thank you for all your efforts, and for taking good decisions (even during tough times) that benefited all the stakeholders and also for answering all our queries with patience and for conducting conference calls every quarter without fail. We always look forward to these calls as we get more confidence after listening to you speak.

Queries

-Can you talk about India’s ad-tech/online advertising market. We don’t have much information about the market as it is not well covered like in the US. We wanted to know how different it is from other markets (like US, Europe, LatAm, China etc).

-Now that there’s growth in the business without additional funds, do you see the necessity of an LOC?

-Do you expect Android to make similar changes to its privacy policy like Apple/iOS did?

-What’s the impact of global supply chain issues on BCG (and it’s subsidiaries)? Does it lead to a cut in ad-budget by advertisers?

-Do you have plans to acquire a CTV ad company?

-What headwinds do you see for ad-tech companies in the future?

-Annual Report and AGM updates

[Logan]

They make few silly mistakes frequently. Instead of mentioning it as FY2022, they have mentioned as FY2021. Main heading is correct – Outlook for FY 2022 but while mentioning specific quarters they have made mistakes. For Q2,3,4 FY2022, they’ve mentioned FY2021. I remember last year for September or June quarter they had mentioned date as 31 June or 31 September.

They should check properly before sharing these official documents. Some vultures will try to prey on these mistakes and will try desparately to create unwanted negativity.

[Logan]

@Rishi_Life, it’s because of fluctuations in rupee vs dollar. There’ll be an increase in value of BCG’s subsidiaries’ assets when dollar rises and BCG reports them as other comprehensive income. If there’s a decrease in dollar then there’ll be little losses. I think they do it as per SEBI rules.

The CFO talked about this in one of the conference calls (don’t know which quarterly call exactly). If you have recordings of those then you can listen to them so that you get a better understanding.

Importantly those income/losses aren’t from operations and that’s why companies report them after PAT.

[Logan]

I wish everyone a very happy Independence Day. Hope everyone becomes financially independent because of BCG.

Jai Hind.

[Logan]

My problem was with one person not showing respect to everyone (the whole forum) by saying things like – “this forum is also infected with vested interests”.

Every member here has put his/her hard earned money in this stock and they have the right to share their opinions. Nobody made any comment that would lead to the forum being called like that. Just because someone doesn’t agree with some opinions doesn’t have to mean they can write whatever they want.

No need for diverting the topic by talking about 3 digits or 4 digits. Respecting others should be the same regardless of price. Let’s end this here. I don’t want to drag this silly topic any further.

[Logan]

(I’m speaking on behalf of all the forum members here)

@Raja, it’s surprising (and little funny tbh) to see your comments – “I have a feeling that this forum is also infected by vested interest”.

Just 2 or 3 realistic comments and you come to this conclusion. You have to be careful when you make comments like that because people can use the same comments against you. They can say that you are hiding the facts and talking only about the “potential” positives that haven’t even materialised.

What I and others have talked about are based on numbers that are in front of us and what you are talking about are assumptions that “may” or “may not” result in growth. I don’t understand how bonus and ESOPs are ingredients for growth. I can understand about LOC, acquisition, being debt-free etc but not bonus and ESOPs.

More importantly Subex and Mastek aren’t really competitors or peers of BCG. Just because some websites and some people put these companies under the same category doesn’t mean they are real peers. If you compare results of “real peers” of BCG then you’ll understand that BCG didn’t perform well.

We didn’t even criticize the company or the management, we just shared our opinions on the results. We didn’t say it was poor either, we said that we are disappointed. There’s a big difference between those two. We have never doubted the efforts of the management team and we have supported them even during tougher times than this. It’s like a football match where the match ended in a draw when we were hoping/expecting a win. Though we’ll be disappointed with the result, we’ll not stop supporting the team, especially when they are putting all the efforts and when they are having problems (mainly cash flow issues).

Everyone can’t be positive for the sake of being positive. When BCG didn’t perform well in Q2 and Q3 we made similar comments and that time no one made a comment like you. Also we were very happy when BCG did well in Q1 and Q4. We even asked the management/CEO about the lack of growth in business in the conference calls too.

For BCG to be properly valued, the business also has to grow. If there’s no growth then the market will give below average valuations. Efforts and results are completely different. Markets won’t give proper valuation just because the company is putting efforts, it’ll appreciate them but ultimately it’ll look at the results. Some people give targets of 500, 1000 or 1500. For 500, considering PW and bonus shares, the P/E will be more than 100. Without growth how can we expect to see those valuations? Companies that have higher P/E multiples have higher growth rates.

We all want BCG to trade at very higher valuations but that should happen based on merits and not based on hypes or assumptions. The management team is doing everything that they can to grow the business, sometimes it’ll result in good growth and sometimes it’ll be flattish. We have to accept that fact.

Everyone talks about NASDAQ all the time but there also BCG will be valued well when it shows good growth rates. Before getting listed there, they should get a proper rating here and for that to happen the company should show good growth rates.

[Logan]

Disappointing results compared to last year’s. Last year for Q1 there was a growth of 20%+ but this time it’s flattish. Only good thing (though not to be too excited about) is the 8% growth in revenues in digital advertising.

All adtech companies did very well this quarter except BCG. Usually 1st quarter will be good for BCG and I was hoping to see better results.

[Author]

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