Tuesday, January 17, 2012

Broadvision BVSN Hype or Reality

Broadvision has been garnering attention recently from the recent release in information from Lebed's mailing list. If you haven't heard of Jonathan Lebed, he gained the attention of the SEC while hyping stocks and selling them leaving others holding the bag. The SEC fined him and required that he give up a fair amount of his gains. Lebed is not touted as an analyst as he does not hold any of the required licensing to be bonded by securities law.

Now on to Broadvision. Broadvision sells business to business on-line platforms. Their newest push is into social media. They announced today that they are partnering to use its platform to host the event Digital London March 13-14, 2012.

Unfortunately, I don't foresee much in terms of gains for shareholders until Broadvision significantly boosts its cash flow and revenue. Lebed has touted that this company will receive attention in the space because of the upcoming potential Facebook IPO. Broadvision's platform ClearVale has only been on the market a limited time. Because of this it has not been seen as the leader of the B2B social media space. There has not been any analyst coverage since 2005. Analyst coverage from WallStreet went null since Broadvision went on the brink of collapse when Vector Capital offered .84 a share for the entire company. There wasn't enough votes to have Vector Capital take over Broadvision so Broadvision remained independent. Since that time revenue has not improved. It's other two remaining products K2, and Quicksilver has had continued declines in revenue and maintenance revenue. ClearVale will not make a material dent to offset these declines in revenue. There are also numerous options in the social media space, and the barrier to entry is minimal, especially with the low overhead cost of creating this type of software from a startup. While this may keep costs low in terms of R&D, Broadvision will have to expand its salesforce which has declined from over 1,000 to under 200 today. As that expands so does its expenses. The real question is will Broadvision's ClearVale revenue expand enough to offset Broadvision's continued losses, and its negative cash flow problem? Over the past decade this seems unlikely.

Another reason is that until Broadvision creates some products that improves its presence in the marketplace, it will have to play catch up to the pure play social media leader Jive. There is a reason why brokerage houses have pushed Jive instead of Broadvision. Broadvision has been dead money for nearly a decade. As management continued to hire employees while business in the sector had went in a free fall. Broadvision has also done very little in terms of their revenue for nearly a decade as it has continued to decline up till its most recent report.

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