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McKhenry

5,366 Posts.

873

10/05/19

15:39

Post #: 38509651
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Originally posted by Holdtight: ↑

Wow. Talk about open to interpretation!
IMHO DM stood up and took it on the chin. Everything with building a company from scratch ( start up )always take 2-3-5 times longer than expected and budgeted for. MOST FAIL.Most that fail do so because they are stubborn and they don't listen and adjust strategy. IMHO bud/lifx is in the minority.

They launched a new hardware product that they imagined would add value to the energy monitoring space because Noveda deal could not be agreed. ( btw Noveda is in administration ). It took them several month to discover that customers wanted the "start to finish" solution and not just the data processing. The companies skill set IS software--- but they felt the hardware space, at the time, didn't have the required characteristics they were looking to have, so they tried to build it!!!!!. With the benefit of hindsight, this avenue has been a mistake ( so too was parse but who would have seen the privacy issues with data changed so dramatically !!) My best guess is it would have take 3 months to design and build the hardware, 1-2 months to build a protype and test. A few months to manufacture. 3 Months for customer trials and feed back. A few months to make adjustments and launch version 2. So after 12 months or so to discover that a change in direction is required in not unacceptable. FWIW wattwatchers have been in hardware for 11 years and have only recently got traction.
As for spending $15m-$20m on the product, the majority is still of great value. At its peak there was 40ish people working for bud. The great majority would have been working on the software components. Integrating LIFX ( remember they are part of working with OHM before Bud owned them ), gaining security approvals for wifi connectivity, certifying a multitude of building monitors and building management systems, etc etc. All this work has not been in vein. This reminds of the pathway Nearmap took 2010-12, before the tech was finally what the market wanted. NEA got to under 10c. Now its almost $4. DM and Travis basically told us that the sales are slow and not to expect that to change quickly ( my words, not theirs ). Its obvious to me that they have something in the pipeline that will get them to the $1.2/ quarter in revenue, or they would have cut costs further. This is not financial advise, but if I was relying on OHM revenue much greater than $1.2m / quarter any time soon I would exit the stock and save on stress.
Even without LifX coming to the rescue, I believe DM and the board were on the right pathway after the recent 3 quarterlies. They needed to reassess.

The fact that Lifx deal has been accomplished is an enormous help. The lifx business is far more mature than Ohm and having it in the group gives the Ohm business (ie the regulator and auditing reports, monitors, data collection and processing (not the OHM hardware)) more time to deliver what the market requires.
The market place for smart lights has just begun and Lifx as #2 in the world is mature enough a business to fully benefit from the expansion phase of the next 3-4 years. By which stage the OHM business and Lifx business will look completely different to what it is today. I believe that the next 6 months will see the profit with a solid EBITDA and large and growing revenues. All IMHO.

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@Holdtight how did you feel about booking LifX revenues as 125% YOY growth, as opposed to 4.16% YOY growth in original business?

BUD Price at posting: 6.6¢ Sentiment: Hold Disclosure: Held
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