Dear Reader,
Driving back from visiting a very intriguing penny share company in leafy Sussex last Friday I tuned in to Andy Murray’s match against Andy Roddick. ‘This has all the makings of a classic’, the BBC commentator informed me. ‘This could be one of those five set marathons that we never forget,’ said another. And, according to golden girl Claire Balding, the crowds on Henman Hill were ‘molten Murray lava, waiting to explode.’
New contracts and earnings predictions boost small cap, Microgen
Having lost the rights to broadcast so many of the nation’s favourite sporting events, the Beeb’s efforts to hype up the few that it still has left are becoming quite hysterical. Far from being the only broadcaster not to carry commercials, the BBC carries as many as any other, the only difference being that the BBC simply advertises its own programs. - Cash-rich software provider Microgen (ticker: MCGN) reports new contracts with manufacturers and financial institutions and says that earnings for the year will beat forecasts. The shares are up 5% today and 27% over the past month.
- Broker Arbuthnot has increased its 2009 earnings per share (EPS) estimate for Microgen to 6 pence from 5.6 pence, for 2010 to 6.2 pence from 5.9 and for 2011 to 7.1 pence.
- Arbuthnot has raised its target price for Microgen to 80pence but says this looks undemanding “given the backdrop of positive earnings momentum and the solid balance sheet”.
But its attempt to engage the audience does not end there. Suddenly it has become all inter-active. ‘E-mail us and let us know what you think!’ invited the Wimbledon commentator. And so we learned that ‘Bob and Shirley are on a boat in Poole Harbour listening to the match, and are almost falling overboard in their excitement!’
Media pundits are now more about advertising than commentating
Who cares what Bob and Shirley think? And, for that matter, who cares what the commentators look like? Back in the days when Dan Maskell was providing his elegant commentary that so perfectly complemented this graceful game, we never saw him. I doubt whether anyone beyond his friends and the folk on the tennis circuit had any idea what he looked like.
But these days we have a camera perched in the corner of the commentary box. We have to see what they look like. We are expected to enjoy their chirpy humour and share their little in-jokes. We are encouraged to ring in to their phone-in shows that evening. Sometimes when I watch sporting events I wonder whom we are supposed to admire – the competitors or the commentators.
No doubt I am an old fogey. Brought up in the era of Wolsenholme, Arlott and Henry Cotton, I still believe that the best commentators simply inform and describe. They elucidate an event but are never a part of it. Look how far have we come from those days!
Now I find the presenters’ constant harassment for us to phone in with our views, send text messages, visit the BBC web-site, or tune in to some follow-up show nothing less than extremely irritating. But this desperate effort to involve the audience is just one consequence of the media revolution that has left all of the established old guard fighting for their very existence.
Looking for a way to play the trend in ‘new media’
The forces of change are well known. The world-wide web has given us all access to a limitless amount of information and all available for free. Commentary on events need no longer be left to salaried editorial writers. We can all twitter and text and e-mail and get our views out there. ‘E-books’ are threatening to deliver the death blow to the printed word, meaning that we need not buy all eight sections of the Sunday newspaper but simply the bit that is of interest. With young viewers more likely to go on-line than turn on the telly and machines that enable us to skip the commercials, advertisers are deserting commercial television in droves.
Media moguls are desperate to respond, but how? Out of the rubble of the old business model some new structures are emerging. Rather than fight the new on-line community the newspapers, magazines and broadcasters are making their content available on-line and trying to grab their share of this audience. Suddenly the proprietors of established titles are trying to capitalize on the loyalty of their customers, by offering them cheap cases of wine or discounted seats on Eurostar. Somebody told me that the Telegraph makes more money from these commercial deals than it does from selling copies of the paper and I can believe it.
The media scene is changing very fast, and as always there are winners and losers. While independent television stations and local newspapers are fighting a desperate battle for survival, new media concepts such as interactive game shows and You Tube are in the ascendancy.
Our habits are changing. We are no longer prepared to accept news and entertainment as it is delivered to us. We know what we want, and we know where and when we want it. There are threats and there are opportunities and the prizes will be won by those who are far-sighted and bold. When it comes to investment I would not touch the old media with a bargepole.
Instead, I’m looking for the small cap companies that are actively tapping into this trend in the new media. Ten Alps (ticker: TAL), Mirada (ticker: MIRA) and Centaur Media (ticker: CAU) are all penny share companies that are trying to get ahead of the curve. These are worth a closer look.
Good investing,
Tom Bulford
For The Penny Sleuth
P.S. I’ve just discovered one dynamic UK-listed company that’s great way of investing in ‘new media’. Its business model is simple. It places a TV show at the heart of a number of other money-making opportunities and is now established in some of the biggest and fastest growing markets in the world. I believe the shares are poised to make a gain of up to 94% in the next 12 months. You can read about this company in detail along with two other excellent penny share ideas in the latest issue of Red Hot Penny Shares. To secure your copy, click here.
P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.
