Well, that’s the way to not only waste $48 million on a dud buy, but see your shares cop a pounding from nervy investors into the bargain who carved $US88 million off iSentia’s market value yesterday after it delivered more bad news in an update.
Two years ago, media monitoring and content company iSentia bought King Content for $48 million and dismissed and in doing so rejected some analyst and shareholder concerns that the content marketing boom was starting go cold.
Yesterday and iSentia, which was formerly known as Media Monitors, had to face up to the problem that it was wrong – it said it will shut King Content due to its poor performance, and take a $37.8 million write down that will see its balance sheet value fall to zero.
Investors reacted and sold off the shares, and they ended down more than 20% at $1.76 as the value of the company slumped to $352 million. The value of the company is now down almost 49% so far in 2017.
To compound the bad news, iSentia chief executive John Croll also announced a shock profit downgrade for the group, with revenue and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to fall below guidance provided in May
Revenue for the 2016-17 financial year will be $155.1 million, below guidance for $162 million, while underlying EBITDA will be $41.5 millon, below guidance of $44 million. No wonder with those misses that investors punished the stock yesterday.
But Mr Croll tried to put an upbeat spin on the downgrade, which came three weeks before the company is due to report its full-year profit on August 23.
"While we are clearly disappointed with the performance of the business during FY17, particularly the King Content operations, the board and management remain confident in the market positioning and growth potential for Isentia.
"Our focus now is on leveraging our core business where we have a significant market share, and enhancing and broadening our products as we deliver the most comprehensive media intelligence and insights to our customers in FY18."
