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Summary:

This is among the first such IPOs in the still-nascent online video search space, and almost solves the mystery of the weirdly secretive rel…

This is among the first such IPOs in the still-nascent online video search space, and almost solves the mystery of the weirdly secretive relationship between the data/information search company Autonomy and video search consumer site Blinkx. Also, keep in mind that Blinkx was on the block for a while two years ago, but a deal never materialized.

Anyway, the announcement on this from Autonomy is very dense, so I’ll try explaining: The UK-based Autonomy has exercised an option to take over the consumer site Blinkx (Blinkx founder and CEO Suranga Chandratillake — a former U.S. CTO of Autonomy — told Search Engine Watch in 2005 that Autonomy didn’t have any equity in the search site, but was only providing the search technology behind the service)….the site had about $10-12 million invested in it since it founded in 2003. With the takeover, Autonomy is spinning off its consumer division (the technology), merging it with Blinkx Inc (the video search site), renaming the two together as Blinkx, plc, and then will float them through an IPO on London’s AIM market in May. Autonomy plans to hold 10 percent of the demerged unit after the listing.

The move should also help Autonomy focus on its enterprise division. Will be interesting to watch out for Blinkx’s IPO filings as that will give an idea on the kind of revenues the much-hyped-yet-poorly-perceived company has been making.

FT: Autonomy has had a lower profile in the consumer market, however. It launched a consumer search technology in 2000 but was dwarfed by rival search engines such as Yahoo and Google. In 2005 the company re-entered the consumer sector, when it began a joint venture with China Netcom Broadband Corporation, the telecoms operator, to provide a internet video search for Chinese consumers.

  1. From what Autonomy's chief exec said on the conference call, it sounds like its own R&D efforts have been into helping create a new ad model for Blinkx. It wants to help content owners distribute video via p2p then embed clickable ads in the video – click on some cool sunglasses to buy them. Thus making TV advertising cost per action not CPM, and trying to take on Babelgum/Joost (emphatically not YouTube). Blinkx also has exclusive rights to use Autonomy's tech in the consumer space.

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  2. The video search engine space is getting pretty competitive. Add to that the other online video content engines like Joost and things are getting very interesting. I recently did a summary of four newer video search engines including Blinkx in this story:
    http://brentevans.blogspot.com/2007/04/video-search-engines-different-from.html

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  3. Here's a tricky investor question about this demerger that I challenge someone to answer as I can't figure it out. Can investors get Blinkx shares in May if they buy Autonomy stock now, after the Dividend Payout Declaration Date, but before Autonomy actually buys Blinkx? (This article reads as if Autonomy has already exercised it's option, but the company press releases say, "it is to demerge its consumer division", not that it has done so yet, which is why I ask.)

    Typically dividends are paid out to investors who have owned stock as of the "Record Date", which is usually at least 30 days prior to the "Declaration Date", or the date the Board announces plans to pay a dividend. But in this case Autonomy announced the demerger before it actually owned what it plans to sell and spin off. It owned an option to buy, but did not own actual interest as of the day before the declaration to invest. To me that means Autonomy will buy a new company within the next few days, then sell it and hand out dividends to Autonomy stockholders during the Blinkx IPO in May…

    Is this a sort of dividend loophole where you can basically benefit from buying the stock after the Declaration Date? If Autonomy doesn't yet own Blinkx then it has to pay for it, which means that as a stockholder, no matter how later you buy stock before Autonomy buys Blinkx, you are paying for the purchase yourself (even if you buy after Autonomy announced its intent to pay a dividend.) In fact, even if you buy stock after Autonomy buys Blinkx, if you own it when they sell Blinkx then shouldn't you be entitled to part of what was sold off?

    If not then what about those who invest in Autonomy stock between the time Autonomy buys Blinkx and the time it spins it off? For example if NEW investors buy Autonomy stock now, before Autonomy gets the chance to basically pay off its CURRENT investors to spin off the new company, wouldn't new investors basically be buying for a loss if they also didn't receive dividends?

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  4. There has been lots of evidence that Autonomy and Blinkx were effectively the same company; working from the same offices, using the same staff. Autonomy have always disguised this by saying that as an OEM customer Blnkx would of course need access to Autonomy development team and staff. It will be interesting to see exactly who are the shareholders of Blinkx. If it is true that Autonomy used some of its own cash and staff to launch Blinkx then they need to declare their real interest. Mike Lynch will also need to declare his own interest in Blinkx especially if he has used Autonomy resources to build it.

    Autonomy has a bad habit of deceiving the press through very clever PR and marketing. Just look at the recent press releases for deals that they have apparently won. If you take the time to speak to the customers listed you will see that most of these deals are very small upsells on components of the Verity technology. Companies like FT, Oracle, Symantec, Lexis Nexis are not basing their search strategy on Autonomy despite constant PR from Autonomy to suggest this. I watch the market very closely and their main rivals are beating them on most of the larger strategic deals in the market. The analysts chose not to take notice but once they do Autonomy shares could tumble. Let's hope that Blinkx has some reality behind the clever marketing or Autonomy could find itself in big trouble.

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  5. In respone to the de-merger challenge.
    Clearly no details of the de-meger are available yet, however with dividend payments, shares trade "cum" and "ex" dividend on a specified date. Look out for this date when more information becomes available.

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