Brightcom Group Limited (Formerly Lycos Internet) - Way to Digitalization

profit and all is fine if people have confidence on numbers. market perception could be negative also because of relatively complex business. have heard rumours about management being opaque with numbers etc. whats your view on that

Dear aojha,
According to my view management is clarifying all about business and number at every quarterly in call conferences.I am going through all conference call and make myself clear about business.

Guys,
For a forum of Valuepickr quality, we should not even be discussing Lycos Internet.
You don’t need to read Financial Shenanigans to find issues with the stock.
Their con-call pdfs (not voice recordings) has the following as people who participated.
Mr. Vinayak Angadi from Christ University
Mr. Kuberan Marimuthu. He is an Individual Investor.
Mr. Sankar Rao. He is an Individual Investor. etc.

 Guys, wake up and smell the coffee.

Regards
Sriram

Receivables in a digital marketing business / internet marketing business appears a little shady. Most of the business in digital space is done with advance payments or subscription fees unless there is product development involved.

Promoters appear to be juggling from one story to another. From search to IOT. Confusing. I shall give it a skip.

Regards
Kumar

Folks don’t fall for this company. For those of you remember Geodesic can see the similarity.

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I am not sure why people are trying to beat this stock down without giving any sort of justification! Please state any facts you are aware of which justify your statements, random opinions ignoring facts are not useful to anyone. I am invested in this stock so you would be doing me (& others like me) a big favour by pointing out any real problems you can see !!

hsriram - a lot of individual investors (including me) participate in the conference calls. I even attended the AGM where I met quite a few other individual investors. I dont see why this is an issue?! Institutional holding being low could also be a sign of the stock not being discovered yet, is it not?

nkumar003 - I agree most of B2C businesses work on prepay/subscription models. However Lycos is in B2B space, which bluechip brands as its customers. I doubt if say a Volkswagen would pay anyone in advance to carry their advertisements. I have worked with many large organisations in my career and everyone tries to push supplier payments as far into the future as possible to improve working capital efficiency, some even have strict rules which prohibit them from paying ANY supplier in advance. Lycos receivables should be seen in this light. Secondly, I dont think promoters are ‘juggling’ the story. They have always maintained their focus is digital marketing and IOT is a new area they have entered because they see it as having huge potential, with possible impact on the digital marketing business. It may be ambitious and foolhardy, but I dont see malintent. At least this is my opinion.

nav_1996 - please explain what is the similarity with Geodesic here, I for one cant see the linkage. Satyam also did the same business as Infy/TCS/Wipro, that doesnt mean Infy/TCS/Wipro are not good investments!!

Like Niraj mentioned above, I also feel management tries their best to handle all queries, but this being a slightly complex business to explain the efforts are not always fruitful. Not having comparable peers in the Indian listing space makes it more difficult. For those interested, I suggest going through some of the older Annual Reports (company has on its website AR from FY07) which helps understand the business better.

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Company isn’t focused… recently they’ve invested on Internet of Things(IOT) primary business is into Digital marketing company why IOT ? its third party service provider using Googles or Facebook platform …Absence of Wide moat will always discourages Investors to have one in their portfolio and right said in above thread, if Management isn’t keen answering retail investors queries who would be interested investing in their company.

Ramesh,
Sorry if I sounded too harsh with my analysis. In life, trust but verify is my philosophy. When it comes to stocks, doubt until proved otherwise.
Nothing wrong with analyst calls where individuals participate. Can I have the link where they announce the conference call in advance? Else it is a scam.
Conference calls are usually done to discuss the business, not to answer why the share price has not gone up.
Net profit ratios over the years clearly suggest most entries are accounting reversals to show high top line, to get small investors interested. If they end up showing decent bottom line, tax needs to be paid. Some companies do even that to keep small investors excited as they recover it by operating the stock. Lycos doesn’t seem to.
Can give you more reasons, but either this convinces you or more revelations won’t make a difference. My polite advice - please get out of the stock. I have lost money in the past like this. Just don’t want you to learn the hard way. Learn from others’ experience. As Munger says, “you don’t need to pee on a electric fence to learn the theory of electricity. you can read the text book where others have already concluded the same”.

Regards

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@hsriram, I completely agree with your pholisophy of ‘trust but verify’ - hence I am keen to know what red flags others are seeing but I am missing.

On the conference call, the notice is usually given when the quarter results are announced e.g. the press release on 16Nov for Q2 results (uploaded on BSE site) mentioned the conference call on 19th Nov, with login details available on the Lycos website. Plus there is usually a mention on their twitter feed also as you can see here Lycos on Twitter.

On the Financials, I hope you are seeing (a) consolidated numbers, and (b) post 2012 numbers. Prior to 2012 this was LGS Global which was a different company/promoters altogether. Although the LGS business continues in Lycos today, it is less than a third of the business, not growing and current management has clearly stated they will take a call on the business once the debt is paid off. Consolidated because most of the business comes in from across the world (they have ~19 subsidiaries worldwide). This consolidation of course makes it difficult to vet the numbers, so that is one area of discomfort I definitely have.

Assuming you are looking at post-2012 consolidated numbers, will be grateful if you can specifically point out the accounting issues. There was one big writeoff which happened to take care of unrecoverable debtors of the LGS business, but I dont think one can fault the current management for that. Keeping that aside, the numbers and ratios have been quite healthy.

The purpose of this forum being sharing knowledge about companies collectively but leaving everyone to take their own call, I will request you to please share all the other reasons you have - they will certainly make a difference if not to me then to someone else here.

@mvr99, if you are keen to see red flags, Please go through my post (posted on August 16, 2015) in above thread. There I have mentioned some of my queries that I asked to management that I still awaiting to receive. If you can get the same from management, that could possibly show change in management mindset in last 3 months.

Additionally, I too attended concall held on November 19, 2015. I was amazed to see how MD&CEO shouted on an individual investor. Management of a listed company is not expected to behave in that way, if they consider that they only are the boss then its better that they should have kept their business private and not get it listed by acquiring LGS and exposing them to retail shareholder. Afterall retail shareholder are putting their hard earned into that company stock and if that is not earning an investor either in terms of dividends or in terms of capital appreciation then investor has every right to ask management what they are doing in that aspect.

Since I have exposure only to Indian equity markets, I have observed some of the promoters are too arrogant towards retail investors, so from retail investor point of view its better o ignore them when there is a lot of better stocks available for investment.

Regards
Gaurav

Disclaimer: I had only one (1) stock of Lycos in my portfolio, which was bought so as to claim my right to access financial accounts of subsidiary companies which I am still to receive from company.

I am seeing a few things that un-settle me when it comes to their books and management:

  1. There is a new entry under the head intangibles under development in 2014. The head had relatively small amount allotted to it in 2014 … around 19 cr. In 2015 this entry has been deleted and a new entry created under same head. This time this entry is for 164 cr. Any idea what this head is and why was it created in 2014? In absence of clarity on this new entries like these should be considered a red flag. It probably relates to point 3 I am mentioning regarding employee costs being capitalized.

  2. CFO changed in FY 2015 . Auditor remuneration going up from 14L to 20L and as per the concall they mentioned that they are going to change the auditor. Isn’t this just too many changes too soon? Is there a reason mentioned in previous con calls?

  3. They are capitalizing employee costs and consultant expenses related to research. These should not be capitalized. They talk about listing in U.S., but as per their accounting standard and my limited knowledge … they are not allowed to capitalize these expenses. In such a scenario their earnings are over-stated. This I guess to relates to point 1 I mentioned.

  4. Mr. Suresh Kumar Reddy receives zero remuneration. This is a bit odd considering this company doesn’t even pay dividend.

  5. To some extent their business model does explain their high accounts receivable, but there should be a comparative business elsewhere (if not in India), any idea on how I can compare their levels of receivable to a similar company in another country.

Thanks

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The following kind of response doesn’t give any confidence on the promoters (taken from their last conf call transcript). This made me not to look at this script ever again !!

Individual Investor: … My first question is regarding the increased number of pledging of shares as per the latest quarterly results.
Suresh Reddy: This is not related to the company, this is what….these are things that are done outside by shareholding promoters of the company and it has nothing to do with the company.

What kind of response is this ?

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Hi Aman,

I see that your post was written on may 2015.
Do you still hold the same view about this comapany ?

Agree here.

I wonder how Lycos Internet can become a major player in the IOT space? IOT is simply a network of connected devices: you watch is connect to your TV, your fitness tracker can measure your heartbeat, number of steps, etc. What IP (Intellectual Property) does Lycos own or operate on?

When it comes to IOT, Cisco owns the networks (see recent buy of Jasper, a globally leading company which has been operating in IOT for 11 years for $1.4B and which was supposed to go for an IPO this year http://www.forbes.com/sites/greatspeculations/2016/02/05/cisco-takes-a-leap-in-iot-with-jasper-acquisition/#44ee9e9326e8); Microsoft, Amazon, Apple, Google (Google already owns major IOT devices like Nest), etc own the Clouds, Infrastructure and the Devices.

Just because Lycos Internet keeps tweeting (the tweets again suck for a global Digital Marketing agency), I don’t think they can put any major dent in the IOT space. If you think www.lycos.life wearable products like fitness tracker, ring, etc can make any dent, I seriously doubt it with the likes of Apple Watch, Fitbit, Samsung, Jawbone, etc. IMO, an patent less venture into IOT devices is a futile effort without any moat on the part of Lycos Internet / Ybrant.

My 2 cents.

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LYCOS will become major player OF IOT OR NOT? only time will say. Mean while lycos has acquired mysms-company for her IOT PROJECT.
the widely known global Internet brand, today announced the intent to acquire an Austrian company, TriTel A Gmbh, which owns the asset–
mysms ™ messenger and the tech platforms SPH Wien and Kika Social.
mysms™ is a messenger that synchronizesSMSes and instant messages
between a wide range of mobile, web and desktop platforms – all through
a single cloud - based account. This fast growing product already has
three million users and synchronizing several hundred millions of messages.
SPH Wien is a content management and analytics platform for video. Kika
Social is an Unified platform for social media listening,engaging and measurement.

You can study the impact of this acquisition and how serious lycos for Iot.

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IOT is never a play for Lycos. It is a digital marketing agency and it need not venture into areas without any experience like IOT.

Acquisition of a web based SMS solution? Really? The world moved on from SMS and Sync 5-7 years ago and Lycos (not so widely known Internet brand anymore) is still stuck in buying SMS solutions? When was the last time people send SMS’s? I find it hard to believe why the company made that acquisition!

Please try searching for SPH Wien or Kika Social and you won’t even find them on the first page results of Google.

Message sync was available from 8 to 10 years ago from the iPhone. Ever saw the ad of an iMessage on iPhone, iPad, Mac? Every social platform or messaging app offers sync across web, mobile, etc.

For the purpose of comparison of the volumes of users, 3 million, you mentioned, see the global leaders:

Platform_____|| Monthly Active Users (MAU) __ || Messages per day WhatsApp ___ || 1 Billion ____________________|| 42 Billion FB Messenger || 800 Million _________________ || 35 Billion WeChat ______|| 700 Mill _____________________|| 30 Billion

Time will say, yes.

My 2 cents.

Q3 results were released last week. The excerpt from the press release is as follows:

Q3 consolidated revenue of Rs.718.27 Crores, up 20.58% year-over-year
Q3 consolidated EBITDA of Rs.199.94 Crores
Q3 profit after tax of Rs.125.17 crores
Q3 consolidated earnings per share (EPS) of Rs.2.63

Revenue for Q3 FY2015-16 was Rs.718.27 crores, an increase of 27.11% Q-o-Q and 20.58% Y-o-Y. EBIDTA for Q3 FY2015-16 was Rs.199.94 crores, an increase of 9.42% Q-o-Q and increase of 22.35% Y-o-Y. PAT for Q3
FY2015-16 was Rs.125.17 crores, an increase of 19.02% Q-o-Q and increase of 26.60% Y-o-Y.

Revenue from Digital Marketing Segment for Q3 FY2015-16 was Rs.609.35 crores, an increase of 32.94 % Q-o-Q and an increase of 23.58% Y-o-Y. PBT from Digital Marketing Segment for Q3 FY2015-16 was Rs.179.31
crores, an increase of 10.46% Q-o-Q and an increase of 25.86% Y-o-Y. Revenue from Software Development Segment for Q3 FY2015-16 was Rs.108.92crores, an Increase of 2.08% Q-o-Q and an increase of 6.18%
Y-o-Y.

“The team has delivered great results in bringing home the numbers. Video and Programmatic advertising have dominated sales yet another quarter,” said Suresh Reddy, Chairman and CEO of LYCOS. Financial Highlights

Business highlights:

LYCOS Advertising
Media Buying (Publishers): Our participation in Adtech New York brought forth new businesses from existing publisher groups in expanding our business in more territories Programmatic buying became an important part of our media supply

Video Advertising
A New video product: Vid-In was launched. Vid-In is an O&O placement, above the fold with good viewability and customization. It’s one of the premium video products in the market. We also developed our mobile activity with the launch of mobile app supply

Technology
Business Intelligence: We are able to now optimize yield based on Ad types and formats of the video players for our advertisers Auto-tools development: This quarter we proceeded with the development of auto tools, enabling advanced alert capabilities for best pricing on media. The tools also enable bid optimization which automatically finds the optimal bid in different demand side platforms. This solution has already been launched at of one of our larger client installs of Compass.
Compass: We released the header bidding solution to both manage a
publisher’s auctions and participate in it as pre-bid partner

LYCOS Media
Team is working on a major relaunch of the site and services across the network.

LYCOS LIFE
The new edition of the Band and the Ring help users quickly & easily manage their online life The most oticeable change users will experience is a new, customizable dashboard allowing people to see most of the features on a single screen Significant progress in the development of the marketing messaging for the brand ‘LIFE’ and the products. Initial testing started through Facebook and other stake holders through email

Apollo Lycos NetCommerce (APLY)

A new company website was launched www.aplyindia.com
A new product website was launched www.aplymart.com
Demo of the platform for online stores is now open to all visitors
The first client is on board for cross-border commerce from the leather apparels/accessories segment

Can someone please add the details from the concall?

As standalone entity (Indian arm) represents less than 20% of consolidated revenue and peanuts in consolidated net profits, isn’t it wise to analyze financial accounts of foreign subsidiaries independently ?

I have tried to get financial account for FY 2014 and FY 2015 in last six months, but even after commitment from their IR officer, till date no success. So seems a rat in kitchen.

Anyone else interested can make efforts to get financial accounts of milk providing cows (foreign subsidiaries) before making a call on this, otherwise it’s a shot in dark.

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Compare Lycos fitness band with Taiwanese fitbit or others popular you will know the difference !!
Lykos is more or less a dead brand…do not invest till they come up with something imaginative and different !! But with current management it is very difficult to recreate from its ashes