Is Something Wrong With This Stock?

I've been downright critical of BroadVision (Nasdaq: BVSN  ) over the past six weeks. The company's stock has been vacillating wildly for the better part of three months on relatively little news outside of a semiweekly news story which paints the company as either the best thing since sliced bread, or the Sodom and Gomorrah of the investing world.

I don't think I've seen a piece that's covered the middle ground as of yet, but one thing is for certain from my personal experience: Something doesn't smell right.

On one side of the coin is notorious penny stock promoter Jonathan Lebed, who is calling BroadVision his top pick of 2012. My best guess is BroadVision's lack of analyst coverage and its meager 4.5-million-share float attracted Lebed in the first place.

Also in the bull camp is the National Inflation Association, which informed the markets in January that it held (at the time) a 145,000-share position in BroadVision and felt it was the cloud play of the future. The organization also stated that it could, at any time, sell its remaining shares at will. Convenient, wouldn't you say?

Then, on Tuesday, a nonprofit organization called the Association of International Deflation Society came out with a press release touting BroadVision as the worst pick in the marketplace.

Does it not seem fishy to anyone that Lebed and the NIA have been beating the door down on BroadVision weekly, sometimes daily, and then an organization with the acronym AIDS comes out of nowhere to claim the opposite? Something seems amiss to me.

Allow me to dissect the arguments from each side just a bit deeper.

The optimists are correct in their claims that BroadVision is garnering customers. However, this hasn't done anything to allay an 11-year streak of declining sales. In 2000, BroadVision's annual sales totaled $416 million; they are just a shade under $18 million over the past 12 months.

Lebed has been steadfast in his claims that BroadVision could grow faster than Jive Software (Nasdaq: JIVE  ) , but the proof is in the pudding. Even though I'm not a fan of Jive, I can still recognize the fact that Jive's revenue grew 67% year-over-year, and it gained notable clientele including Thomson Reuters and SAP while expanding its relationship with Accenture and Hewlett-Packard. BroadVision's sales are falling and its largest clients include Aeroxchange and Synaptics, which are relative no-names when compared to the companies under Jive's belt.

From AIDS, we get a website designed with Intuit's template software, which likely means it was put together in cookie-cutter fashion. The website attempts to take a look at why ClearVale is a failure and uses social-media sites Twitter and Facebook to prove its argument. While the website more or less emphasizes similar points I made a month ago about BroadVision, I can't help but feel the only purpose of this website is to counter the mind-drubbing newsletters thrown onto the market weekly by the NIA.

Whether inflation has anything to do with BroadVision is anyone's guess. What I can tell you is this: BroadVision is losing money, its sales are declining, and it's burning through its remaining cash. It doesn't matter what company we're looking at; that's a recipe for failure 100% of the time. Unless BroadVision's management is issuing the news from here on out, I'd just as soon take what the NIA and AIDS have to say and throw it out the window.

What's your take on the BroadVision fiasco? Is this a legitimate run-up or do you agree with me that something just doesn't smell quite right? Tell me and your fellow Fools about it in the comments section below.

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He has little tolerance for people who hype stocks for their own benefit. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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Read/Post Comments (12) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 08, 2012, at 1:25 PM, goldminingXpert wrote:

    The AIDS site seems a little more credible to me than you seem to be giving it credit for. I'm not sure I'd throw its analysis out the window.

  • Report this Comment On March 08, 2012, at 1:58 PM, sjwilson1988 wrote:

    Is this article serious? AIDS-----AIDS----please notice the name---was created as a mock site to mock the National Inflation Association. The National Inflation Association is a stock promotion site. Inflation has nothing to do with they do. They've taken the opinions of Jim Rogers and Peter Schiff and Ron Paul to create a site that they can market stock picks to. AIDS is essentially refuting the BS stock promotion argument of Lebed and Gerard Adams.

    Anyone can start a non-profit. Notice they say it is unfunded. They started it to combat the absurdity of Lebed's site. Notice the acronym. Notice how they said Broadvision has AIDS.

    You don't know who to believe? One site uses SEC filings, actually examines the product against its entire peer group and calls the glorified product to see how many people will attend. The other site is run by a guy who has a 100% pick failure rate long tern.

  • Report this Comment On March 08, 2012, at 2:19 PM, TheLumberDoktor wrote:

    Hey guys, please see the video i just made last night about this very same issue on you tube.

    http://www.youtube.com/watch?v=s0g0mKvyzbs

    Or look up TheLumberDoktor

    And search for BVSN video

    This is exactely what i said too, just last night

  • Report this Comment On March 08, 2012, at 2:34 PM, Medicalrecordman wrote:

    Sean, you need to get your facts straight before writing articles. The BVSN float is not 4.5 million shares or this fiasco would have never started. It's 2.5 million and this entire pump and dump is about nothing more than the float. Had this company's float actually been 4.5 million shares, the stock would still be stuck at $8.00 and Lebed and crew wouldn't have decided to pump this garbage. Simple as that. Oh ... and at $8.00, the stock is still wayyyy too expensive based on this company's awful financial metrics.

  • Report this Comment On March 08, 2012, at 6:28 PM, petomm wrote:

    If you go to www.whois.net you can see that the site: AIDS - www.aid-society.org - was recently created on March 6th. So, most likely someone who has a huge short interest in BVSN created this site.

    They are trying to do the opposite of what NIA is doing, which is make it go down.

  • Report this Comment On March 08, 2012, at 9:34 PM, Mt4s wrote:

    It seems plain to me what happened, NIA promoted the heck out of the thing with the most recent target being the short sellers who were/are way overdue for delivery and hence a margin call was due. NIA was a bit gleeful in their exuberant pontifications. The counter to their threat was the newly created Aids website which I suspect was the doings of a few(?) short sellers who stood to loose a bundle if BVsn breached 50 which it did. Everyone who paid over 50 is now mad as hell - nobody wins when belligerent egos are at work. Thanks to all who bought my shares.

  • Report this Comment On March 08, 2012, at 9:59 PM, jtgold77 wrote:

    Sean,

    You seem like a nice guy, so if I sound snarky, I apologize in advance. That’s not my intent here. My intent is “to educate and amuse” I’ll leave the “enrich” to the adults who risk their money in the market. It’s their money, let them do what they want with it.

    You asked some good questions (repeated below).

    “Does it not seem fishy to anyone that Lebed and the NIA have been beating the door down on BroadVision weekly, sometimes daily, and then an organization with the acronym AIDS comes out of nowhere to claim the opposite? Something seems amiss to me.”

    Does it seem fishy to you or anyone else that the overall Enterprise Social Networking space is like rocket fuel on fire?

    (Cisco’s John Chambers is into it. Several venture capitalists are into it—to the tune of what? $85 million for Yammer? Salesforce.com is into it. Others are too, and we already know about Jive and BroadVision.)

    I don’t know the Lebeds or the NIAs from Adam, but here’s a really fun exercise. Pull out Jive’s chart from December 13, 2011 to March 7th, 2012. Now pull out BroadVision’s for the same period. If you squint just a little, you can’t tell the difference. My chart says Jive’s up 49.57% and BroadVision’s is up 300.60%--but here’s my real point and question: Isn’t it possible that BroadVision is running up because it’s newest SAAS product, Clearvale, is similar to Jive’s and that one is being valued in the billions, with the other valued in the low millions? I mean, c’mon, seriously, do the “Lebeds and NIAs” have THAT much influence? Maybe, but I just doubt it.

    As to the AIDS spoof, it might have been in poor taste. (AIDS isn't funny.) And it's doubtful the nonexistent "nonprofit" moved the stock--though someone associated with it might have.

    Coincidentally, the bogus website itself was thrown up the same day and the “news” was tossed out there when BroadVision’s stock was at its second 52-week high in less than a month, with quite a few folks shorting the stock.

    What's your take on the BroadVision fiasco? Is this a legitimate run-up or do you agree with me that something just doesn't smell quite right?

    What fiasco? I think the “Lebeds, NIA and now AIDS” issues are red herrings, and THAT does smell to me. The run-ups of Jive and BroadVision can’t possibly be based only on earnings or cash in the bank --at least not yet. So why go back into the Dark Ages to compare BroadVision with any other Enterprise Social Networking play?

    Clearvale, Jive, Yammer and the others are new, and some smart people are ponying up millions upon millions of dollars into these companies; some of them are likely basing their purchases on market potential, programming and product. (Yes, I’ve done my research about the actual product and programming—and I believe the potential is real. But knowing that Softbank is involved was almost good enough for me, as far as Clearvale was concerned. They’re not lightweights, with $477 million annual revenue in 2010.)

    You mentioned a few other things that I’d like to highlight here. “What I can tell you is this: BroadVision is losing money, its sales are declining, and it's burning through its remaining cash.” Questions: Are Clearvale’s sales declining? What’s BroadVision’s burn rate? Can it survive long enough to prove Clearvale? (I’m joking here, but some of this stuff reminds me of when Jay Leno asked Jeff Bezos about his little money losing machine called Amazon.com back way when.)

    Lastly, I’d choose BroadVision’s management team and leadership in a pickup game any day of the week. If nothing else, I value survival, and they’ve survived a long time, and developing Clearvale was shear genius as far as timing is concerned. And who knows? Clearvale might actually become extremely successful. We’ll know soon enough, and the red herring smell will go away with time.

    P.S. Sorry these comments are long. It won't happen again. Best.

  • Report this Comment On March 08, 2012, at 11:05 PM, msrudie wrote:

    Interesting how many articles I've read about BVSN and how this stock has been so over-analyzed because of what it has been doing for the past month. I agree with itgold77...numbers don't lie and the analysts need to get their numbers straight. All of them, not just a few.

    Also interesting how Barcharts has had this stock at a major Buy more than a few times. To tell you the truth, this stock has made me more money than ANY of my others in over a year. I've now bought more stock, and it's making me more money. Numbers don't lie and Clearvale was a great idea and thousands who have done their homework will make money on this stock in the long run.

    The short sellers are hurting and some have been devastated by the rise on BVSN putting them in a panic and coming up with AIDS. There is nothing more risky than going short. Get over it, you blew it. By the way, thanks NIA. You did your homework.

  • Report this Comment On March 09, 2012, at 9:39 AM, sevenseaman wrote:

    jtgold77,

    Are you referring to the same management that had the numerous reverse split in the last decade?

    And the same management who hasn't answered to questions about a pump and dump scheme created by Lebed and the NIA. AIDS isn't a laughing matter but Broadvision seems to have rubbed plenty of people the wrong way with how they handled this. Besides answering to the abnormal trading activity they have given a denial stance rather been proactive. To top that off INSIDERS ARE SELLING. Look up their recent filings. This is one of the most dishonest management teams present. Chen and company should be investigated and halted.

    There is a difference between suriving and growing. You could be alive but on life support. To compare Broadvision to Jive and Facebook is pretty dishonest.

    That's like comparing Google to altavista. They aren't even in the same league.

  • Report this Comment On March 09, 2012, at 1:41 PM, TMFUltraLong wrote:

    goldminingxpert & sjwilson1988,

    That's the point is that both of these sites seem to have nothing to do with "inflation" whatsoever. Yet both seem to have picked some random obscure company that no one even traded four months ago out of the hat. It just seems silly to believe anything coming out of either of their newsletters.

    TMFUltraLong

  • Report this Comment On March 09, 2012, at 1:42 PM, TMFUltraLong wrote:

    medicalrecordman,

    4.5 million *outstanding* shares and CEO Pehong Chen owns 36% of them. What's interesting is BroadVision's CFO filed an S8 yesterday to sell 180,713 shares.

    TMFUltraLong

  • Report this Comment On March 09, 2012, at 1:55 PM, TMFUltraLong wrote:

    jtgold77,

    "Does it seem fishy to you or anyone else that the overall Enterprise Social Networking space is like rocket fuel on fire?"

    This is true, but none to the extent of BroadVision. And keep in mind that every other company out there is growing like wildfire. Jive, Yammer, Lithium... any social enterprise and cloud-computing based... except for BroadVision. Every segment for BroadVision is tracking lower and they even said in their 10-K they have no experience running a cloud-computing based business.

    "I don’t know the Lebeds or the NIAs from Adam, but here’s a really fun exercise. Pull out Jive’s chart from December 13, 2011 to March 7th, 2012. Now pull out BroadVision’s for the same period. If you squint just a little, you can’t tell the difference. My chart says Jive’s up 49.57% and BroadVision’s is up 300.60%--but here’s my real point and question: Isn’t it possible that BroadVision is running up because it’s newest SAAS product, Clearvale, is similar to Jive’s and that one is being valued in the billions, with the other valued in the low millions? I mean, c’mon, seriously, do the “Lebeds and NIAs” have THAT much influence? Maybe, but I just doubt it."

    I find it more coincidental that Lebed and the NIA began pumping the stock right as it began rising. It's not as if Clearvale came out and the stock began to rise. Clearvale's been out for a while and the company is taking the longest....route...ever...in transitioning its business away from legacy products and toward Clearvale.

    "Clearvale, Jive, Yammer and the others are new, and some smart people are ponying up millions upon millions of dollars into these companies; some of them are likely basing their purchases on market potential, programming and product. (Yes, I’ve done my research about the actual product and programming—and I believe the potential is real. But knowing that Softbank is involved was almost good enough for me, as far as Clearvale was concerned. They’re not lightweights, with $477 million annual revenue in 2010.)"

    Yeah, NIA and AIDS are Red Herrings, but isn't another red herring the fact that CEO Pehong Chen sits on Softbank's board. Are you really surprised that they won a contract from Softbank? Have they won any other large players? Not really... not to the extent that Jive is racking up legitimate customers.

    " Questions: Are Clearvale’s sales declining? What’s BroadVision’s burn rate? Can it survive long enough to prove Clearvale?"

    BroadVision has been very coy on its Clearvale sales so I can't speak too much into that. I can definitely say they aren't increasing the way Jive's sales are. BroadVision's 10-K admitted to a continuous burn rate. I suspect it will be in the neighborhood of $5-$10 million in 2012, but that's just my best guess. Can it survive? Maybe... but do you really want to chase a company 400% higher if it's just struggling to survive (which is more or less my entire point).

    Keep up the good comments... never apologize about a lengthy comment :)

    TMFUltraLong

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