UPDATE 2-Blinkx full-yr loss narrows, sees continued growth

* Full-year oper loss $10.5 mln vs $18.3 mln * Revenue doubles, user base expands 57 pct * Shares down 13 percent as analysts express caution (Recasts first paragraph; adds CEO, analyst comments)

By Tresa Sherin Morera

BANGALORE May 19 (Reuters) - Blinkx Plc (BLNX.L), an online video search engine, posted a narrower full-year loss, helped by a growing number of users, but concerns over the outlook and the company's cash position hit its shares, sending them down 13 percent.

The company said it was maintaining a "cautious and conservative stance" due to current market conditions, but said it was confident of continued strong growth into 2010.

Analysts expressed caution about the company's lower-than-expected net cash position and its growth outlook amid a tougher economic backdrop.

"Shares are down probably due to the forex loss on cash of $9 million, which I think is larger than the market would have been expecting," analyst Rajeev Bahl of Piper Jaffray said.

This leaves the group's cash position some 2 pence per share lower than expected, Bahl said.

Citigroup analyst Marc Sugarman, who expects Blinkx's growth trajectory to be pressured by lower search traffic and the economic backdrop, expressed caution about the company's prospects.

"Forecasts of a trebling or quadrupling of revenues look optimistic now against this backdrop," he said.

However, Blinkx Chief Executive Suranga Chandratillake said video search traffic continued to grow strongly.

He said its cash position was not an issue and the foreign exchange loss of $9.3 million was just a reporting translation effect.

"Our cash still remains within pounds, it's not an actual loss...and in fact because we have a pretty significant base in the UK, it doesn't even affect us too heavily on the operational side," Chandratillake said.

Blinkx's cash balance at end-March stood at $21.4 million.

The company, which was formed in April 2007, said its user base expanded to 88 million visitors in March from 56 million a year earlier.

"It's one thing to have an audience," Chandratillake said. "The second half of the equation is how much can you sell advertisements for in front of that audience, and that's really reflected by the CPM. Very uniquely in the ad space we've actually managed to maintain our CPM at $16.25."

CPM, the cost per thousand views of an ad, is a commonly used advertising metric.

For the year to March 31, the company's loss from operations narrowed to $10.5 million from $18.3 million for the 49-week period from April 23, 2007 through March 2008.

Revenue totaled $13.9 million, up 113 percent.

The company, which signed a technology integration agreement with interactive service provider Miniweb earlier this month, and Chandratillake said he hopes to see some revenue start to trickle in towards the end of the year or early next year.

Under the deal, Miniweb would use Blinkx's software for video search, targeting and personalization as part of its online services platform.

"It (the deal) is more a longer-term play that gets us strategically into the right market rather than something that will impact revenue in the short term," the CEO said.

NO ACQUISITIONS IN SIGHT

The company with an index of more than 35 million hours of searchable video and more than 450 media partnerships said it was "very happy" with its business right now and was not looking at any acquisitions.

"We remain opportunistic. If the right deal would come along at the right price, we'll certainly consider it, but at this stage we don't expect to do anything like that," Chandratillake said.

Blinkx shares, which remain 50 percent higher than their March 2009 lows, were down 13 percent at 16.5 pence at 1516 GMT on the London Stock Exchange. (Editing by Gopakumar Warrier and Mike Miller)