[Logan]

I’d like to add one more thing. The impairment that Rubicon/Magnite did was for a book value of $300M (previous year). Out of that total $300M, Additional Paid-In Capital was $400M and Accumulated deficit was -$99M (negative). I’m not an expert on these topics, so my opinion may not be correct but if we ignore the Additional Paid-In Capital of $400M then Rubicon impaired assets worth $95M (650-700crs) on a deficit of -$100M.

Considering these and the losses, Rubicon’s next year book value became $164M, out of which Additional Paid-In Capital was $418M and the Accumulated deficit was -$253M i.e. the deficit widened from -$99M to -$253M.

(I’m not spinning this impairment positively, I’m just saying that sometimes impairment are necessary even if companies are in a difficult situation)

[Logan]

I’m not supporting anyone here, I’m just sharing my opinions on this topic.

Impairment of assets is common in product based companies. Companies develop a product (software etc) and usually after few years, they write off those assets. Most of these assets are intangible assets.

Then there’ll be impairment of goodwill which is very common in companies that acquire other companies and pay more than book value.

Out of the $122M that BCG impaired last year, $71M is related to products, internal tools and databases. This type of impairment should be done regularly instead of doing it at once.

The $47M impairment was related to Advances to Publishers and agencies in developing new markets. These are also common when you don’t get anything in return from keeping some publishers account. Advertisers/Brands won’t be interested in these publishers. The company has be to careful before choosing publishers and agencies and also has to be careful on how to handle new markets.

Rubicon Project (now Magnite Inc) did an impairment of $95M (maybe 650-700crs) in 2018.

Then Lycos assets write off, the company has no other choice but to remove Lycos assets because BCG doesn’t own Lycos. BCG values Lycos at $36M which is close to that 250crs figure.

[Logan]

@jay69, I don’t know how this affects BCG. The good thing is that all the ad-tech companies knew that Google will phase out cookies but I guess they thought Google will replace cookies with an alternative. Now that Google is not doing that, market got nervous and that’s why the recent sell off happened.

With this decision, Google will become more dominant. Already big players have 80% of the market share.

This affects mostly ads on the browser – Google Chrome, so companies that advertise more on it will be affected the most. Still we’ll have first-party cookies so companies working directly with publishers will be less affected.

We should ask the CEO about this. Right now we can only guess about the impact because we don’t know how reliant BCG is on third-party cookies.

As mentioned in the article, most of the companies are coming up with different initiatives to replace cookies. We’ll only get to know about the impact after few quarters or maybe after 2022.

[Logan]

@Raj, no need to apologise to me, I know how frustrating it is to see the price going down even after seeing good developments happening in the company.

Everyone should thank the @admin for creating this forum. Everyone has gained so much because of this forum (even the haters of this forum). You get different opinions on different topics. You don’t get this in other places. Obviously we’ll be biased on many things but no other forum has shared the amount of knowledge that this forum has shared.

[Logan]

@Raj, this is not the first time you have said some weird things about the forum. Whenever the price is in red you come and write that no one should discuss anything because price is not changing etc. Once you had said that this looks like a paid forum etc. There’s a way to criticize someone/something. You can’t use words like unforgivable sin, trapping investors etc.

I don’t like many things that many members write here but I won’t stop them and I’ll simply neglect their posts. I’ll only reply if I find it necessary or when they directly reply to me. I would’ve neglected you today but I didn’t see the logic in linking company’s fundamentals to the forum and I didn’t like the words that you used.

If you don’t like the forum then stop following it but don’t say weird things again.

[Logan]

I don’t see the logic in linking this forum to fundamental developments of the company. If we use that logic then fundamentals of Reliance should depend on Reliance forum in MMB.

Then decision on buying or selling shares of any company (not just BCG) should be taken based on individual research. If they can’t take that decision then people should stick to RDs or FDs or mutual funds.

If any shareholder has any problem with the company, then he/she should talk to the management of the company. If the management doesn’t respond to them, then he/she should go to the concerned authorities. Every shareholder has all the rights to complain against the company and its management if they find anything suspicious.

[Logan]

@sac6310, I understand that you wrote that message because you were frustrated, these things are not new to me. I won’t change my views just because someone else thinks I’m wrong. If we look at only price and not give importance to fundamentals then we should’ve bought DHFL at 700+, Yes Bank at 300+, Gitanjali Gems, LVB and many other companies stocks at sky high prices.

Last time one person wrote that traders won’t give a damn about fundamentals etc. The very same day Google made an announcement on cookies and all the ad-tech stocks fell more than 10-20% on the same day (some are still down 20-30%). Technical parameters of these stocks were very good before the announcement and people were giving very higher targets but what happened later? did fundamentals matter or not? Imagine what would’ve happened if traders didn’t check Google’s announcement and only looked at technical analysis which were very good.

People having different opinions are very common but targeting other people just because they have a different opinion is not good. People like it or not, fundamentals are very important.

[Logan]

@sac6310, its interesting to see you finding problems only in my posts. See I care about stock prices but I also care about fundamentals and business related stuff too. You can’t force me not to write about those things just because you don’t care about them. What problem do you have if I write about subsidiaries or ad-tech industry?

3 weeks back Google announced that it’ll not start an alternative to replace third-party cookies and because of that all the ad-tech companies’ stock prices fell more than 30%. Google, Facebook, Amazon and the big players already control 80% of the market and with Google’s decision on cookies, Google will become even more dominant. Some companies will go out of business because of that. It’ll change the way how internet companies make money, this not only affects ad-tech companies but also affects advertisers, publishers etc. Small businesses will be hard hit by Google’s decision. Shouldn’t we discuss about that? What business will BCG do if it can’t find any advertiser? Who will pay BCG then?

Okay I’ll take your comments seriously and I won’t care about fundamentals, business, subsidiaries and the whole ad-tech industry. Suppose BCG will be hard hit by Google’s decision and it’ll go out of business. That time will you come and protect my investment? Think twice before you comment on anything.

Please dig up everything about BCG and its promoters, no one is stopping you to do that. As a shareholder you have all the rights to do so. Have I told you not to do that even once? Give a complaint against BCG’s promoters, management team, subsidiaries, PW allottess, PO allottees, G-Gang, and everyone you can think of. You have SEBI, the Police, ED, MCA and many other options, you have social media too.

40% of BCG’s revenue and close to 50% of profits come from OMS/Brightcom. If people think Brightcom is not part of BCG, don’t you think we should give clarity on that?
Tomorrow you go and complain to the authorities saying that Brightcom is not part of BCG and you tell them to investigate on that. What will be their response to you? They’ll tell you to check properly before complaining. One simple visit to Brightcom’s website will give you the details.

Please don’t care what the ad-tech industry is all about and don’t care about BCG’s subsidiaries too and don’t compare BCG with other ad-tech companies too. But don’t force it on me.

[Logan]

BRIGHTCOM PRIVACY POLICY

Online Media Solutions Ltd. dba Brightcom (“we” “us” “our” or “Brightcom”) is a global ad-tech company that operates and provides an online supply side platform currently known as “Compass” (“SSP”).

I don’t know why some people have confusion regarding Brightcom/Online Media Solutions. OMS does business as Brightcom. This concept is common in the western countries. You need a brand name to attract people and you can’t use online media solutions as your brand name, that looks like some old company. Brightcom looks modern.

[Logan]

Replying to #11336

@Diana, sorry for the late reply, I have not been feeling well from the past 1-2 weeks and I didn’t follow the forum during that time.

It’s a good news that BCG is planning to go for an acquisition after so many years. I always knew that the CEO will use that PW money for acquisitions. I thought he would go for an AI company (agritech) because he talked more about AI in the AGM. My guess (just a speculation not to be taken seriously) is that the first payment of 65crs will be used to settle with Daum (65PW+31PO=96crs which is $13M). Rest $3M may come from internal accruals or maybe he has negotiated for a lower settlement amount.

Another major event that happened was Google’s announcement two weeks back. I don’t know whether everyone saw the announcement made by Google regarding cookies, it is a very big announcement and it’ll change how adtech companies track people. Google said it will not come up with new technology to replace the current one.

All the major adtech companies’ stock crashed more than 30% after that announcement (companies like TTD, Pubmatic, Magnite, LiveRamp etc) . Most of the adtech companies are prepared for this but still the market overreacted to the news.

I don’t know what impact this has on BCG. Affle was not much affected because it works mostly with apps so it has direct relationship. Google’s move affects mostly ads on Chrome. It has more than 60% market share in that. Many companies have come up with new methods to replace cookies. TTD has Unified 2.0. I think the companies that work directly with publishers won’t be that affected by Google’s move. I think BCG has maintained good relationships with publishers and advertisers all these years which may benefit the company. B Local initiative was a good move.

[Logan]

Replying to #11235,

Yes mayur saar, everyone should be careful and smart enough to understand the motto behind my messages, they should never trust someone like me and should only trust you. I have one confusion saar, should they trust what you write on Twitter or should they trust what you write in MMB? On Twitter, when the price is rising or when there are any developments, you always hype the stock, praise the management and you share so many informative messages but when the price falls you go to MMB and criticize the management. I don’t understand this saar.

You hide (protect) your tweets whenever there’s a fall in prices and sometimes you block people when someone asks you critical questions. Do you remember that Peter Lynch guy (Beating The Street) on Twitter? Last year when the price started to fall, you blocked him.

How many times have you hyped the Adauth data saar?

And your targets saar, when you feel good, you even talk about prices of Rs.5000 per share and recently you have written that the price can reach Rs.1500 also, though this time you didn’t give targets.

Then should I talk about Vertoz Advertising? Who has misguided more people there? Many times I have said BCG is better than AFFLE but not even a single time I have told someone not to buy AFFLE’s shares.

I haven’t changed my mind frequently like you have and I have replied to all the queries that people ask me here. Many times we had arguments but still I won’t stop replying to people’s queries. I have been the same during both good and bad times.

Then technical analysis you share on Twitter, how many times has the price reached predicted levels? It’s not completely true that traders and MIs don’t give a damn about fundamentals. If that was the case then why do prices go up whenever there’s a good news related to fundamentals and why do prices go down if there’s any bad news? If a company posts good results then why do prices go up? Isn’t it related to fundamentals? Just because one person is not ready to sell shares doesn’t mean everyone will have the same opinion. Yesterday I shared my opinion and didn’t force you to agree with me.

Investing is not pure science, you can’t see some charts, put formulas and come to conclusion. If that was the case then every investor/trader would be very rich.

Then finally, okay, I may have some hidden agenda/motto etc but what about you?

Those who live in glass houses should not throw stones

It means that “One who is vulnerable to criticism regarding a certain issue should not criticize others about the same issue.”

If you can’t respect other people then just ignore them and don’t say weird things about them. I don’t have to prove myself to you. This is a public forum and sharing personal details won’t be a good idea. It’s your wish that you chose to use your real name but you can’t expect everyone to follow the same. I have always respected you for bringing awareness about BCG’s business and I will continue to have the same respect. Let’s move on and concentrate on our investments. There’s no use in pointing fingers at each other.

[Logan]

@harshay, great detective work. Keep it up.

[Logan]

@Diana Horton, I apologise if I have hurt you. That’s not my intention at all.

I have not written those posts because you have criticized the CEO, I wrote them because I didn’t like your response to my post #11220. In that post I wrote my opinions on why the price may not increase and you responded saying

“So let’s not try too hard, to conceal the real fact and the real hardcore ugly and pitiful truth, by givng some glorified explanations to safe guard the culprits.”

I felt that your response was little harsh. I didn’t try to conceal any truth, I just shared my opinion. I have seen similar things happen in other companies I have invested in (mostly small cap companies). Then one more thing is that I felt whatever I write these days, you try to undermine the importance of my posts.

Last time we argued about topics related to the markets and before that on a different topic.

Yes, sometimes I’ll be Pro-CEO, Pro-management but not all the time. As you have also written, I have criticised the CEO many times, mostly for the pathetic state of corporate governance. If I don’t like any action of the CEO then I’ll be the first person to criticize him.

When we have different views and opinions, we’ll always have arguments, which is very common. We should make sure that we don’t hurt anyone. Healthy arguments are always good for us. Let us continue to share our opinions and let us focus on achieving our common goal.

[Logan]

There’s no point in arguing with each other when we have different ideologies/understandings. You say you don’t want to have any conflicts with me but you’ll always try to undermine whatever I write. I just shared my opinions on the price movements and you came and commented as if those things don’t matter at all. Anyway, our views and opinions are different but we both have the same goal i.e. good returns on our investments. Let us concentrate on achieving that goal.

One request – from now on please stop replying to my posts. If you don’t like my posts then ignore them. I don’t have to force my opinions on you and you also don’t have to force your opinions on me. All these problems are coming because you reply to my posts and I reply to yours.

As you have written, this forum is for everyone and everyone can express their views and opinions. Let us continue to share our opinions, taking them or leaving them depends on the readers. It’s always better to have different views and opinions for the betterment of the forum.

[Logan]

Conclusion

Looking at all these, we can say nothing is certain and that the Adtech industry is very competitive. Many companies that had more resources than BCG have struggled. 2015-2018 was a period of consolidation in the Adtech Industry. Many companies were acquired by bigger companies and other companies went out of business.

Adtech stocks had good reception in 2012-13 then from 2014-2019, except a few, all the other stocks had very bad reception and were beaten down heavily. Many companies didn’t deserve pathetic valuations but that was the sentiment back then. Now many companies don’t deserve high valuations but the market sentiment is very strong.

BCG’s problems are self-inflicted, okay, but what about the problems of all these companies? Did all these, and many other companies make up problems or are there real problems that every company faces?

Only when we dig deeper we’ll understand what the situation is. This is a business that needs ample cash for survival, and for growth. If you don’t invest in technology and if you don’t stay competitive then you lose business. It took time to close off bank debts because of cash flow issues. BCG had to dedicate cash to balance both – business and resolving outstanding issues. I’m not justifying the delay but it is how it is in this competitive field. As the CEO said in one of the conference calls, if he spent all the cash to pay off debt or to pay DAUM in one-go, instead of focusing on the business then the business would’ve suffered. If the CEO and the management team take even one bad decision also then its all gone.

The companies mentioned above haven’t taken many bad decisions but still they couldn’t survive. What if similar situation happened to BCG? The CEO deserves some credit at least.

[Logan]

Magnite/Rubicon

Rubicon Project, before merging with Telaria fell from $20 levels to below $1.75 levels. Later, after the merger also it struggled for some time but now it’s outperforming all other shares because the interest in Adtech companies went up in the last year and CTV business is gaining momentum. In this case, the combination of two separate businesses created synergy and that helped the combined entity more. If the companies didn’t merge then they wouldn’t have had good growth rates. Combined entity gets the resources, technology etc to grow the business.

Revenue (without adding Telaria’s revenue)

2011 ($37M), 2012 ($57M), 2013 ($84M), 2014 ($125M), 2015 ($248M), 2016 ($278M), 2017 ($156M), 2018 ($125M), 2019 ($156M)

Rubicon’s IPO was in 2014 and like all the other companies, it also had good growth rates when it came to the market but it couldn’t sustain that growth and had to make many structural changes and finally decided to merge with Telaria to form Magnite.

Criteo

Criteo’s revenues have increased all these years but it’s price fell from $60 to below $6 ($5.89 is the 52-week low price). Profits are also almost flat like BCG but still it fell.

Revenue – 2012 ($350M), 2013 ($589M), 2014 ($988M), 2015 ($1.3232B), 2016 ($1.80B), 2017 (2.297B), 2018 ($2.30B), 2019 ($2.262B), 2020 ($2.073B)

Profits – 2012 (+$1M), 2013 (+$1M), 2014 (+$46M), 2015 (+$60M), 2016 (+$82M), 2017 (+91M), 2018 (+$89M), 2019 (+$91M), 2020 (+$75M)

Criteo’s IPO was in 2013 and as I’ve written above, companies have good growth rate when they come to the market (or they choose to come to the market when they can have higher growth rates).

Criteo, once valued ($2.59B) more than that of many other adtech companies put together, crashed to valuations below $400M or something in the last few years. Criteo’s share prices shot up again in the last year because it was beaten down very badly and also it made few structural changes. The market sentiment also improved because in the last one year, the market became more interested in the Adtech industry.

[Logan]

MARIN SOFTWARE

The stock has declined steadily from $119.24 in March 2013, to $1.40 in 2020. Marin spent over $100M rewriting its software, with no significant effect on revenues or share price. The company is running out of cash, management and the board seem to be drifting, and sales continue to decline. But the ad market remains strong and the company still has $53 million in TTM revenues.

Marin, from 2006 till IPO in 2013 has raised $184.95M totally which is more than what BCG had raised ($100M). Now Marin is trading at $2. Marin, even though it had good cash/liquidity couldn’t stay competitive.

Revenue – 2013 ($77M), 2014 ($99M), 2015 ($109M), 2016 ($100M), 2017 ($75M), 2018 ($59M), 2019 ($49M).

Rocket Fuel Inc.

2013 (September)
Price – $61.23
Valuation – $2Billion+

2017
Price – below $2.00
Acquired by Sizmek in a deal worth $145Million
Deal Price – $2.60

Rocket Fuel had listed on the stock exchange in September 2013 at $29 a share. Initially the market was pleased with the company and the stock soon rose to $61.23 with a market capitalization of $2 billion. It’s lowest price was $1.70 which is 95% below it’s all time high price.

RocketFuel acquired a company [x+1] in August 2014 for $230M and still it couldn’t grow or stay competitive and later it was acquired by Adtech company Sizmek for $2.60 per share, in a deal that valued the company at $145M. At one point, the MCap was more than $2B but later was acquired for just $145M. It was sold for less than what it paid to get [x+1].

(Taken from an article)

Rocket Fuel’s dismal performance is not for lack of trying. It started new self-service offerings, including Dynamic Creative and improved Native capabilities that integrate into Dynamic Creative. The Dynamic Creative for self-service solution dynamically selects the layout and products most appropriate for each advertising moment and can create targeted advertisements almost real-time based on prospective consumers’ internet browsing habits.

So, RocketFuel’s case is similar to Millennial Media and Marin Software, even though these companies put all the efforts to stay competitive, they couldn’t survive. BCG’s case is little different, BCG has not lost focus on the business but it couldn’t grow because of cash flow issues

Not just these companies, even Magnite Inc (back then Rubicon), Criteo etc and many other companies have also struggled.

[Logan]

Millennial Media (MM)

2012 (March)
Price – $27.90 (IPO)
Valuation – $2Billion

Year – 2015 (September)
Price – $1.34
Acquired by AOL in a deal worth $238Million.
Deal price – $1.75 (30% premium to $1.34)

Though MM had good debut and the business was doing great, it couldn’t compete with giants and was sold for peanuts. It had acquired many companies, tried to expand the business but still failed. See how the stock has crashed, from $27+ to below $1.50.

Before it came to the markets it had higher growth rates and it had raised $240M which is 2.4 times what BCG had raised.

This is what Forbes wrote about Adtech stocks in an article,

For the rest of the ad tech industry, it’s another reminder that the public market that once ate up Millennial’s shares is now a brutal one to engage. TubeMogul trades below its 2014 IPO price and Rubicon Project trades below its 2014 first-day high. Rocket Fuel trades at a fraction of both the list price and initial highs of its 2013 IPO, as does Tremor Video. Even Criteo, which went public in October 2013 and improved share value pretty consistently for months after that, has endured a 30% haircut on its share price since mid-July, dropping it close to its first-day price.

[Logan]

@Diana Horton, I’m sorry for writing that and for misguiding everyone. Yes, I’m always wrong and you are always right and everyone should neglect whatever I write and should follow only you. Why do I always do research before coming to any conclusion? I’m such an idiot and a big fool. You are right to say that suppression of prices is the reason for this valuation, there are no other factors and the many issues that BCG has/had are not important at all. Only fools like me think those issues are important. I wasted so much time researching on different topics.

You can never be wrong anytime, there are many examples to prove it

1)like when you said that price/valuation will increase if the number of retail investors increase.
2)you wrote that the company was hosting the conference call on 20th Saturday, almost 1 week after the results because the company would get PW approved before that.
3)You wrote about the company providing wrong SHP details to exchanges and that proper details are in MCA.
4)You were right about PO funds, NCLT didn’t block that money and wrong information was mentioned in NCLT website.

On a serious note,

Whenever I see your posts, I remember this quote

To a man with a hammer, everything looks like a nail

For every problem you just say suppression as the only reason. I’m really tired of seeing that. If anyone disagrees with you then you attack them (mostly you attack only me). I had neglected you many times but still you always bother me and you will try to undermine whatever I write.

[Logan]

We look at the recent Axis development as long term investors (LTI) and think that this will lead to jump in prices. That’s where we get it wrong. Though this is one of the most important material development, but it isn’t the only development that is in the pipeline. LTIs won’t move the prices, but traders and momentum investors (MI) do. Now we should ask ourselves whether any trader or MI would buy BCG’s shares.

The answer is a simple NO. Why?
Traders and MIs are not emotional like LTIs and they won’t have the patience that we have. Though they take risk, but it will be calculated risk. Right now they won’t take any calculated risk because of many reasons like PW, NCLT case, NOC from Axis, revoking pledged shares etc. Among these reasons, PW is the biggest.

Main Reason

– Why would any trader or MI want to buy BCG’s shares above 8 when the PW price is set at 7.70? and what if they buy shares now and the company doesn’t get approval from the exchanges and then the price falls to below 7 levels because of that news? They’ll have to wait till the next material development to get back their money or worse, they’ll have to sell at a loss.

Other Reasons

– What if NCLT doesn’t give a verdict now and it takes more time to get the final verdict? There will be uncertainty till the case moves out of NCLT.

– Though NOC and revoking pledged shares take time, many traders and MIs won’t be comfortable till these happen.

We believe in the growth story of the company and we buy more shares if the price falls (if we have funds) but traders and MIs won’t do that. They’ll either dump their shares or not buy more. If they dump, price will fall.

Sometimes when the sentiment is very positive, the price will still change and shoot up but in my opinion, we can’t expect that to happen now because of the PW. As mentioned above, no trader will take risks buying the shares above 8.

Then we have to look at other thing also, which is, the price may rise after PW and after other material developments but it still won’t reach very higher levels because of the involvement of traders and MIs. As I’ve written above, these people are not in for the long term and they will be happy to get small returns. They won’t consider intrinsic value, growth of the business etc and will focus only on prices (and momentum).

Again, the price may reach intrinsic value without any pause if the sentiment is very positive like in Tanla which reached intrinsic value without too many pauses. To get that extremely positive sentiment, in my opinion, many developments have to happen, like, BCG should get the LOC, the business must grow and should have very high growth rates, the company should pay dividends (which I don’t like personally) or the company should go for buybacks (which I prefer because it reduces the free float) and many other positive events should happen.

I don’t think the company will buyback shares in the near future and I don’t think it’ll pay very high dividend because, right now, growth of the business is more important.

(Note – these are my personal opinions, please don’t take them for buy or sell decisions and also ignore my opinions if you don’t think its important)

[Author]

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