18/10/2006
In July Growth Company Investor recommended avoiding internet video streaming specialist Vividas as it had churned through two CEOs in the year and was breaking in a new business model. But this new strategy, involving additional products and sales through resellers and channel partners, appears to be gaining traction.
As an emerging technology that provides an superior alternative to existing methods, it is important that Vividas’ product gains recognition and credibility. This is now happening: Sony Pictures used the technology to screen trailers of its blockbuster films such as The Da Vinci Code; Vividas provided the technology for an unnamed ‘major TV network’ in the US to stream European Football Championship Qualifiers on the internet; and a potentially highly rewarding contract has been signed with the ‘largest pay-per-view on demand market on the internet’ – if you can guess what that is.
New chief executive Paul Neville moved from the FD chair in August and has several experienced Cable & Wireless brains with him on the board. He says ‘we’ve got a lot of companies looking at us’, including trials with internet service providers. The company has spent half a year training up its new channel partners so they can sell the products properly and in the coming half he expects to see them ‘delivering’.
The new strategy only came into full effect at the end of the financial year, yet streaming customers increased in the year from 60 to 205 and streaming income increased almost sixfold to help sales grow 72% to £962,000. Losses increased from £1.3m to £2.6m before tax and amortisation, slightly ahead of expectations. House broker Teather & Greenwood foresees losses almost halving next year and turning to a £1m profit in 2008 for 3.06 earnings.
Cash burn is about £0.15m more than sales at the moment, so the recent £3.1m funding deal with Spanish investment consortium JHG should allow the company the necessary time to break through, allied with year-end cash balances of £1.2m. We're more positive on this group now, but it's still a high-risk speculation.
| Market cap: | £9.85m |
| PE Forecast: | 14.1 |
| Share price: | 43p |
| AIM | £1.29m |
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