* Company warns on first-half earnings
* Trading hit by critical blog post
* Shares down 37 pct
(Adds shares, further analyst reaction)
By Paul Sandle
LONDON, July 2 Video search and ad group Blinkx
Plc cut its profit expectations on Wednesday, blaming
industry-wide concerns about the effectiveness of some kinds of
Internet advertising, compounded by a critical blog about the
Shares in the British group, which were already trading at
less than half the level they were before the blog in January,
plunged more than 40 percent to a two-year low. They were
trading down 37 percent at 38.5 pence at 0748 GMT.
Blinkx said core earnings for its first half to
end-September would be about $5 million below its expectations
after disappointing demand in the last three month resulted in a
shortfall in revenue and earnings. Revenue rose 5 percent.
"We attribute this performance to industry-wide issues of
efficiency and effectiveness, which, in our case was compounded
by the lingering effects of the disparaging blog," it said.
A blog post by Benjamin Edelman from Harvard Business School
raised concerns about the tech firm's business model in January,
resulting in its shares losing as much as half their value. The
company rejected his claims.
The group has a market value of 154 million pounds after the
sell-off on Wednesday.
Analysts at Citi, who have a "buy" rating on the stock, said
the group's valuation was already very depressed, but the
warning was "still a big disappointment".
They said the key question was how much of the problem was
down to the blog and how much was down to structural issues in
Noting that the company had previously said the impact from
the blog was beginning to abate, Citi said the concern was that
industry-wide factors were dragging, pointing to factors like
worries over ad fraud and privacy.
Analysts at Numis, meanwhile, lowered forecasts after the
warning, taking full-year revenue down to $268 million from $288
million and core earnings to $33 million from $43 million.
(Editing by Sarah Young and Mark Potter)