Out Fox The $treet

Small-Cap Insight With the mobile advertising market booming, the continued collapse of Velti ( VELT ) has remained perplexing. The company famously faced a cash crunch due to extremely long payment terms to only collapse after seeing the EBITDA and income plunge after cutting that business. The question still remains why cut a profitable business because of slow payments. The company is a global provider of mobile marketing and advertising technology and solutions that helps brands, advertising agencies, mobile operators and media to implement mobile campaigns. While the decision to cut the slow paying customers that would not agree to faster payment terms appeared correct, it hasn't helped the company or the stock yet. The irony continues to be that those customers also accounted for a decent part of EBITDA and earnings pushing the stock down further from above $10 in September to spending most of the last few months below $2. Clearly the market misunderstoo...

After the close on Tuesday, Millennial Media ( MM ) reported Q4 2012 earnings that greatly disappointed the market due to substantially lower revenue than expected. While the company reported earnings in line with expectations based on solid margins, it failed to predict the shortfall in several large brand deals sending the stock down over 25% in after-hours. The company is the leading independent mobile ad network provider. Its technology, tools, and services help developers maximize their advertising revenue, acquire users for their apps, and gain insight about their users. The company has a platform that enables advertisers powerful Mobile Audience Solutions (MAS) that use the significant scale, sophisticated targeting and uniquely engaging creative capabilities to deliver meaningful results. The article (see Buy Millennial Media Prior To Q4 Earnings ) had suggested buying the stock prior to this earnings release as all data pointed towards huge numbers. Even ...

Millennial Media ( MM ) remains the leading independent mobile advertising network with a market share behind Google ( GOOG ) . The company had one of the hottest IPOs in 2012 yet the stock fizzled from day one. As the mobile advertising market heats up should this stock trade near the lows? The company is the leading independent mobile ad network provider. Its technology, tools, and services help developers maximize their advertising revenue, acquire users for their apps, and gain insight about their users. The company has a platform that enables advertisers powerful Mobile Audience Solutions (MAS) that utilize the significant scale, sophisticated targeting and uniquely engaging creative capabilities to deliver meaningful results. The company reports earnings on the 19th and investors should consider entering the stock prior to the release as mobile advertising heats up. Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer ...

This article is the fourth in a monthly series to analyze the stocks at the forefront of the monetization of the trend towards mobile data traffic. The original mobile monetization index highlighted the leading public companies and defined the concept. Market Data The expectations for the monetization of mobile traffic increased dramatically in December following the nice surprise when Facebook (FB) reported very strong mobile revenue back in October. Analysts continue to become more bullish on the concept. Read the full article at Seeking Alpha. Disclosure: Long AAPL, GLUU, and VELT. Please review the disclaimer page for more details. 

This article is the second in a monthly series to analyze the stocks at the forefront of the monetization of the trend towards mobile data traffic. The original mobile monetization index highlighted the leading public companies. The concept was created as the market continuously lumped the new mobile stocks into the original failures of the relatively old companies such as Facebook (FB) and Google (GOOG) . Recently Facebook reported a huge improvement in the monetization of mobile traffic providing hope for the sector A range of companies benefiting from this shift to mobile traffic continues to grow. The industries range from Advertising to Real Estate to Travel with varying degrees of success and profits. Read the full article at Seeking Alpha. Disclosure. Long AAPL, GLUU, VELT. Please review the disclaimer page for more details. 

The below commerical is from Velti (VELT) , a leader in the mobile marketing and advertising sectors. The stock continues suffer though the company has substantial growth and profits. Interesting to see the possibilities as shown via this ad. Disclosure: Long VELT. Please review the disclaimer page for more details. 

With the much-published failures of Facebook (FB) and Google (GOOG) to monetize mobile traffic that switched from desktop, the sector has obtained a ton of bad press, mostly from uninformed journalists and investors not understanding the difference between legacy companies and new entrants focused on mobile. While other people focus on the rather large missteps, Stone Fox Capital has been focused on the companies benefiting from the monumental shift to mobile provided by fast wireless data networks and a movement to more advanced smartphones and now, more importantly, tablets. A whole slew of companies are benefiting from this shift as happens with every technological move. Legacy companies either aren't savvy enough to make the shift or the economic structure prohibits a move as revenue is cannibalized by the currently lower monetization rates. Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer page for more details. 

Just a few days removed from the stock surging after announcing a huge deal with a U.S. brand, Velti's (VELT) stock ran into a couple of weak statements from analysts. After surging to over $10.40 on Wednesday, the stock ended down over 6% to $9.37 on Friday. The company engages in the provision of mobile marketing and advertising technology and solutions for brands, advertising agencies, mobile operators, and media companies around the world. Following a strong Q2 earnings report (see article here) in August, the stock had been on a huge run, so the drop on Friday might just be profit taking. The frustrating part for long-term investors is that the stock remains one of the cheapest around at only 9x forward estimates. How could any analyst say something to push the stock down from these levels? Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer page for more details. 

Velti (VELT) announced a $27M deal for two years of mobile marketing services for a major US brand. The stock is soaring 13% in part due to the size of the deal, but most importantly is the payment terms of 30 days. The stock was absolutely crushed earlier this year on the news of weak DSOs and cash flow issues from European customers that were taking 270 days to pay bills. The recent 70% revenue growth in Q2 didn't push the stock up as investors remained concerned that customers were not paying bills. With the stock trading at a forward PE below 10, this stock has huge upside as this deal highlights the demand for mobile marketing. It also confirms management statements that US customers would pay on better terms making the going forward DSOs significantly lower. While the chart below shows a stock that has nearly doubled from the lows, it also highlights one that hasn't even recovered from the May highs. If investors start believing in the story, this stock has huge u...

Anybody following this blog for the last six months knows that Stone Fox Capital has been extremely bullish on the independent mobile advertising sector. Velti (VELT) remains our favorite while Millennial Media (MM) has quickly become a second favorite pick. Unfortunately the latter has jumped from $12 to $14 this week. The below interview on Mad Money has great review of the industry. The most important statement was that mobile monetization is not a problem, the problem is the migration from desktop to mobile. As with any industry, the legacy company is impacted while the new company gains the benefits. One part that concerns me is that Cramer didn't ask about the click fraud or click accidents on a mobile phone. The CEO mentioned the higher click thru rate, but it has largely been reported that users accidently click on mobile phones a lot more than desktops. Disclsoure: Long VELT. Please review the disclaimer page for more details.

fter reporting earnings on Tuesday morning, Velti (VELT) jumped nearly 12% after beating analyst revenue estimates. Combined with a big gain on Monday, the stock had a nearly 20% two day gain. Amazingly though, it still trades at extremely low valuations. The company engages in the provision of mobile marketing and advertising technology and solutions for brands, advertising agencies, mobile operators, and media companies around the world. Read the full article at Seeking Alpha. Disclosure: Long VELT, CJES, and SODA. Please review the disclaimer page for more details. 

This model lost a disappointing 6.6% in July versus a 1.3% gain for the benchmark S&P 500. This model typical outpaces the major indices by a large margin in up periods so the last month was a major exception. Since the end of 2011, this model has been running on the theme that the majority of stocks would retrace the losses experienced since the July 2011 levels. In essence, our theory all along has been any losses since that time period were from irrational fear of a second financial collapse that the Europeans were unlikely to allow. Naturally this fluctuates on a case by case basis where any individual stock could move a lot higher or lower depending on circumstances since then. Unfortunately this theory took a major hit as investors piled into dividend paying stocks sending most major indices back close to 2012 highs while at the same time selling the higher risk, global growth stocks. In some cases, stocks actually hit new 52 week lows recently. T...

After repeatedly hearing so many issues with monetizing mobile traffic from the likes of Facebook (FB) , Millennial Media (MM) continues to report massive growth. The company reported 75% revenue growth in Q2 2012. This number bodes well for Velti (VELT) owned in our models. The CEO of MM went on CNBC this morning. Its worth a watch for anybody interested in the sector. One of the most important take aways from this industry is that companies moving from a reliance on desktop supported ads for revenue to mobile is having a hard time matching those numbers. In cases such as Facebook, the company wasn't even ready for the transition to mobile by customers. Another important distinction is that a major difference exists between a retailer advertising on mobile versus Facebook attempting to place ads on mobile devices.  Companies such as MM and VELT sees gains from all the new traffic migrating to mobile. Anything is a net positive to them no matter whether i...

As  Velti  ( VELT ) hits recent lows below $6, investors are left pondering the reason for the sell-off. Especially considering every indicator points towards a robust market for mobile advertising, especially with the advance of the tablet. Velti is the leading mobile advertising and marketing technology and solutions provider for brands, advertising agencies, mobile operators, and media companies. Its Velti mGage platform allows its customers to use mobile and traditional media, such as television, print, radio, and outdoor advertising to plan, execute, monitor, and measure mobile marketing and advertising campaigns that reach consumers through mobile internet applications. Part of the reason for the concerns is that Velti is faced with a technology investor base that doesn't understand the receivable history in the advertising agency sector. The company hosted a financial conference call to discuss the large receivables, but that never helped the stock price. Read...

Velti (VELT) traded around $8.6 prior to guiding up on earnings at the end of May. The stock has been crushed since then due to A/R concerns that never actually turned into major concerns. As the company clarified on a analyst call, the receivable numbers are consistent with the ad agency industry. Regardless the stock has remained weak with it again bouncing off key support around $6 yesterday. From the finviz.com  chart below, it sure appears that the 10% move in VELT today is an attempt to finally break that downtrend. The amazing part is that this stock was over $14 back at the end of March and the mobile ad industry continues to show signs of major growth. VELT could just as quickly return to those levels and higher if the 'risk on' strategy returns. Disclosure: Long VELT. Please review the disclaimer page for more details. 

Ever since Facebook (FB) filed in a S-1 prior to the IPO that it was struggling to monetize mobile ads, the sector has been crushed. Both mobile ad network Millennial Media (MM) and mobile ad agency Velti (VELT) were absolutely crushed. According to the Millennial Media CEO appearing on CNBC yesterday, mobile is monetizing just fine. The selloff was clearly over done and another example of a hot IPO that can be scalped in the after market at favorable prices for investors willing to be patient. Those chasing the initial nearly 100% surge were hammered. Not much to tell from the chart so far, but a potential bottom occurred last week. Disclosure: Long VELT. Please review the disclaimer page for more details. 

After a 33% drubbing today due to irrational fears over the cash conversion cycle, Velti's (VELT) CEO will present at 8:40 AM E.T at the J.P. Morgan Technology conference. Talk about ideal timing if he has a good story to tell. As posted last night on this blog, the CEO has a good explanation for the higher receivables. The company has now history of writing off bad debt so the concern is clearly overblown. The question is whether he can say anything that soothes the market or if the shorts will press even further if he doesn't provide something of substance. Details on the stock moving call: Alex Moukas, Chief Executive Officer will present at the J.P. Morgan Technology, Media and Telecom Conference, to be held at the Westin Waterfront Hotel in Boston, Massachusetts on Thursday, May 17 2012 at 8:40 AM ET. A live audio webcast of the presentation will be available at: http://jpmorgan.metameetings.com/webcasts/tmt12/directlink.php?ticker=VELT and will subsequently ...

For a stock that has been crushed over the the month of May, Velti (VELT) reported earnings numbers that crushed estimates suggesting the whole drop was bogus. The stock dropped from $12.50 to below $8.50 yesterday. The company reported revenue of nearly $52M against estimates of $46M and earnings were basically in line with estimates. Worth noting though that Q1 is the weak period for mobile advertising so the company basically shoots for breakeven results. More importantly though the company grew revenue by 75% or 100% with the main SAAS revenue. So while all the revenue and earnings numbers suggest a much, much higher stock price, the street remains concerned about cash flow and outstanding receivables. The company spent a considerable amount of time addressing the AR issue with three main takeaways. Combined trade and accrued contract receivables are high at around $189M, but only $10M exceeds 150 days. Company has a history of customers paying with only $1M written off i...

After the close yesterday, Millennial Media (MM) reported its first quarterly results as a public company. A couple of interesting cross currents make this report much more compelling than most quarterly results. First, Millennial Media had a very successful IPO that led to an initial pop of nearly 100%. Since that initial day back at the end of March, the stock has plunged all the way back to the original IPO price. This drop further highlights how investors in the after market typically get burned. Our initial report highlighted how the stock was overpriced back then. Second, the company is now the largest independent public mobile ad network in the market. As so, the results will be scrutinized as to the health of the sector in general. Plus the recent news regarding the inability of Facebook (FB) to monetize mobile traffic will derive some focus. Read the full article at Seeking Alpha. Disclosure: Long VELT. Please review the disclaimer page for more details. 

As Facebook (FB) prepares to launch it's IPO this week, the company faces a rather alarming issue. The company continues growing users, but advertising revenue isn't keeping up. Somehow the company has allowed itself to dramatically grow mobile traffic without having a mobile strategy in place. It seems incredible that Apple (AAPL) already has out the 4th version of the iPhone and Facebook still lacks a strategy. Wouldn't the success of the original phone been a great indication that it needed to obtain a plan and in a hurry. Below is a table on the mobile traffic of the leading social networking sites provided by PCWorld. As noted in the article, the average mobile user engaged the app for more than 7 hours back in March. Just look at how you view Facebook. For me, about the only time I visit the site is via my iPhone4. Either I'll post a picture or check the news feed. Hardly though will I go online via my iMac. How could Facebook not have a strategy yet? ...