The BroadVision Saga Thickens: We Actually Get Some Facts!

OK, so BroadVision (Nasdaq: BVSN  ) is no MF Global, so you're all probably getting pretty tired of hearing my take on cloud software play, but a major development occurred yesterday that I couldn't pass up -- we actually heard directly from the company.

Yesterday BroadVision released its annual 10-K, which I have been eagerly waiting to read, to say the least. In response to the company's volatile stock price, BroadVision has the following to say: "We are not aware of any corporate developments that we believe would explain this unusual activity."

Not really a surprise when my contention in the first place is that stock promoters NIA, Jonathan Lebed, and AIDS have been in charge of the stock for months, but it's finally good to hear from the horse's mouth that no corporate development merits such a rise in the stock price.

BroadVision, in regard to its stock price, also mentioned that there exists an outside possibility of litigation against the company if its stock price were to drop significantly from its current levels. It attempted to compare itself to other technology companies that have recently faced litigation due to large price drops that were disproportionate with reported results.

With regard to Clearvale, BroadVision spelled it out plain and simple:

Revenues in year 2011 of $17.6 million were down 19% from 2010 revenues of $21.8 million. The decrease was due to product transitioning. We are investing heavily in our new product, Clearvale, while our older products mature. It will take time for the new product revenue to ramp up. We anticipate that net cash used for operating activities will continue to be the material use of our existing cash and cash equivalents and short-term investments.

In short, BroadVision is betting the boat on Clearvale, but you can expect continued losses and its remaining $54 million in cash to dwindle as it attempts to survive its product transition. The company's accumulated deficit since inception is now up to a staggering $1.2 billion.

We also received a more defined breakdown as to where BroadVision is generating the majority of its sales. Domestically, BroadVision's sales dropped 36% in the America's, while it shed only 8% in Europe. Its Asia/Pacific revenue actually ticked up 3%, largely due to legacy products. Note that this may be the first time anyone has used the phrase "ticked up" with regards to BroadVision's results in more than five years.

But, perhaps the biggest news of the night came from CFO, Shin-Yuan Tzou, who filed to sell 180,713 shares at $40.73. CEO Pehong Chen still owns 1.6 million shares, or 36%, of the outstanding shares and has not filed to sell any thus far.

So there we are folks -- finally, some facts! We now know that BroadVision's revenue is likely to continue to decline in the near term, right along with its cash position, while rivals Jive Software (Nasdaq: JIVE  ) and Lithium continue to grow rapidly and gain notable clientele. We also know, based directly on BroadVision's 10-K, that there aren't any material events that explain the stock's recent surge. If that isn't enough proof in the pudding that something could be wrong with this stock, then I don't know what is.

Care to share your two cents on BroadVision? Sound off in the comments section below.

Unlike BroadVision, whose future is very much in question, one stock has piqued the interest of our senior technology analyst, Eric Bleeker. Find out which company is expected to take advantage of the "Next Trillion Dollar Revolution" for free.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He much prefers 10-Ks as opposed to random newsletters. 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 (18) | Recommend This Article (11)

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 09, 2012, at 4:29 PM, ddental wrote:

    ...so where is the SEC all this time with the obvious manipulation etc on this "worthless" stock....it is a disgrace is it not? NIA and all their bs

  • Report this Comment On March 09, 2012, at 4:37 PM, TMFUltraLong wrote:

    ddental,

    I don't have any material interest in BroadVision one way or the other, but I'm sort of wondering the same thing. We've got the 10-K and it's as plain as day. It's time for the NIA, Lebed and AIDS to back off and let the fundamentals do the talking.

    TMFUltraLong

  • Report this Comment On March 09, 2012, at 5:08 PM, mendex wrote:

    This report is full of nonsense, first you said "BroadVision, in regard to its stock price, also mentioned that there exists an outside possibility of litigation against the company if its stock price were to drop significantly from its current levels. " and then later you state "But, perhaps the biggest news of the night came from CFO, Shin-Yuan Tzou, who filed to sell 180,713 shares at $40.73." Wouldn't that bring the stock price lower? Then they would be getting themselves into a lot of problem.

  • Report this Comment On March 09, 2012, at 5:21 PM, mendex wrote:

    Besides, if you go to http://www.secform4.com/insider-trading/920448.htm you will see that no form have been filled to sell any shares. This report seems to have been written to make a last attempt to bring the share price down before next week when everybody knows that it will skyrocket after the London summit!

  • Report this Comment On March 09, 2012, at 5:23 PM, TheLumberDoktor wrote:

    Look I think the simplest explaination is that this company was pumped by NIA.. CFO is taking atvantage of the share appreciation price, and its headed down. No hype can continue this drive. Fundamentals say otherwise.

    Good article Sean.

    I give you credit here.

    http://www.youtube.com/watch?v=p9vSiMaPPto

    And I have other videos on the Stock

  • Report this Comment On March 09, 2012, at 5:23 PM, mendex wrote:

    Besides, if you go to http://www.secform4.com/insider-trading/920448.htm you will see that no form have been filled to sell any shares. This report seems to have been written to make a last attempt to bring the share price down before next week when everybody knows that it will skyrocket after the London summit!

  • Report this Comment On March 09, 2012, at 5:46 PM, TMFUltraLong wrote:

    Mendex,

    Here's the S-8 for you that shows the CFO's offering. It was filed yesterday:

    http://secfilings.nasdaq.com/filingFrameset.asp?FileName=000...

    TMFUltraLong

  • Report this Comment On March 09, 2012, at 5:54 PM, kewlness wrote:

    All this time, I've been wondering what I could have missed when I made my CAPS short recommendation for this stock.

    Thanks for letting me know it wasn't me this time. :o)

  • Report this Comment On March 09, 2012, at 11:39 PM, geophysique wrote:

    The fact than Broadvision has $54,000,000 cash in the bank, and they have consistently maintained a large cash reserve shows the company has sound fiscal policy. They are not burning through cash, but rather have been financially prudent.

    Dr. Chen chooses to maintain a 36% holding of the stock shows his personal attachment to the company he founded almost twenty years ago.

    Remember this company has no manufactured goods, as do Apple, Microsoft, Cisco, IBM, etc. yet they maintain a strong business and consistent revenues through thick and thin, though yes they have had diminishing returns for the past twelve years, since the dot com bubble pop.

    When the Motley Fool and Seeking Alpha write the same arguments day after day, it just shows their own predisposition and bias, and perhaps their jealousy for not discovering Broadvision first. Also they never analyze the mechanics of the Clearvale system, its pros and cons. Most have probably never even visited www.clearvale.com to find out what all the hubbub is about. It is a great system, and with the 'freemium' Clearvale Express platform, it is not cost nor financial obligation to try out the platform and make a decision if it is right for your business.

    What's sure is this also- Broadvision has plenty of customers, and they are under no obligation to reveal who is using the Clearvale platform. If they have such customers as India Rail and the US Navy, you can be sure there is a heavy security backbone to the platform and that companies feel secure maintaining their privileged information within the Broadvision Cloud. Regarding privacy issues of late, Google+ has suffered a general neglect by the global population, which leaves great opportunities for smaller companies to come in and fill the void in business/social networking.

    People are ready to pay for privacy and security, realizing that with such platforms as Google+ and Facebook they have not displayed respect for user privacy.

    Last point- Broadvision is growing strong in Asia, where they will most likely obtain their best revenues. The USA is not the only market in the world, nor is it even really the biggest/strongest economy in the world. Global economies are coming into their own, and Broadvision gives an opportunity for people to connect and cooperate across the world. The first company to establish a foothold globally will be in pole position to lead the pack, and that company often makes enormous profits while they are in the limelight. Facebook is quickly fading from view of serious investors despite their much publicized IPO and filings, because we are understanding the nature of Facebook's fiscal strategy, which is based on targeted advertising. We don't want to be the commodity, so much so that we are willing to pay for a service which has respect for our privacy, our tastes, our likes, and our purchases.

    Instead of constantly discussing the perceived value of the stock, perhaps the Motley Fool could discuss the pros and cons of the different business/social platforms, ie Jive vs Broadvision vs Yammer etc, and that will show that they actually research companies rather than just researching other financial consultants and their personalities. Jonathan Lebed is a smart cookie. He made millions of dollars as a teenager playing the stock market. Rather than that being reviled he should be admired to an extent. He figured it all out as a kid- while we are all trying to just survive in this bloody market. He's good, and in this case, he just might be on to the next big thing since ______!

  • Report this Comment On March 10, 2012, at 1:59 AM, warycarey wrote:

    This article tries to rip apart BVSN without even talking about whether BVSN's Clearvale stacks up against the platforms of several other companies in this space that are valued much higher for the still low income producing enterprise social networking platform portions of their total business relative to their market cap or implied valuations, they include JIVE (market cap of $1,4 billion but only signed 40 new customers in Q4 2011 while BVSN, market cap of $185 million, signed 33 new clients in Q4 2011). SABA, CRM, Lithium and Yammer are a few others. By the way Clearvale does stack up, and then some, check them all out for yourself and compare. It discusses how BVSN hasn't stated how BVSN will generate revenues. They have, which is and will continue to be to encourage companies to try their Clearvale Express for free (a free option to take an enterprise social networking "test drive" most other companies in this space don't offer) and then upgrade to the more complete paid Clearvale Enterprise. They are doing that now and have a solid plan to grow methodically and gain market share in this space, which is still, as we know, in it's infancy. They also call out NIA and it's key people for being "stock promoters!!", how awful, as if every brokerage house and fund manager on Wall Street doesn't have the next big stock to sell you, as well as probably having someone in their employ who had some run in with regulators in the past. The big guys don't want competition, Goldman Sachs is behind JIVE, connect the dots! At the bottom of this article, you're bombarded with ads about the latest stock that will make everyone who buys it a fortune. So I guess Motley Fool is making money by selling ads to, heaven forbid, stock promoters? I guess it's fine when they're paying you ad revenue. I wonder, does the author of this article have some connected friends who are short BVSN? If any reasonably intelligent investor doesn't see how a secure, "Facebook" like platform at a company wouldn't focus employee productivity and idea sharing to maximize profit and that there is no clear leader in this wide open space curently, they are missing the boat. Lastly, as far as it being futile for BVSN's CEO Dr. Chen to try to re-tool BVSN in another direction to focus on enterprise social networking and betting the farm on Clearvale, thank goodness Steve Jobs didn't listen to those kinds of naysayers when he came back to Apple all those years ago when the company was a shell of it's former self , we might not have ever experienced the i-Pod, i-Phone or i-Pad....

  • Report this Comment On March 10, 2012, at 1:03 PM, TMFUltraLong wrote:

    geophysique,

    I'm not even sure we're on the same planet here, but here goes...

    "The fact than Broadvision has $54,000,000 cash in the bank, and they have consistently maintained a large cash reserve shows the company has sound fiscal policy. They are not burning through cash, but rather have been financially prudent."

    Financially prudent? BroadVision has issued shares in order to bank a large cash position and has been cash flow negative consderably more often than cash flow positive over the past decade. It burned $6 million in cash last year and warned of a continued burn in 2012 as well as the possibility of additional equity offerings in the future. Financially prudent? I think not.

    "Dr. Chen chooses to maintain a 36% holding of the stock shows his personal attachment to the company he founded almost twenty years ago."

    This also allows CEO Pehong Chen to wield enormous voting power over the direction the company takes. With an accumulated deficit of $1.2 billion, everyone now knows who to blame for their losses over the years.

    " Remember this company has no manufactured goods, as do Apple, Microsoft, Cisco, IBM, etc. yet they maintain a strong business and consistent revenues through thick and thin, though yes they have had diminishing returns for the past twelve years, since the dot com bubble pop."

    OK.....WHAT???? We're not even in the same ballpark here. Have you actually read the 10-K?

    Fact: BroadVision's revenue has fallen 12 straight years. Fact: Legacy revenue is declining year after year. Those aren't consistent revenues... thats falling off a cliff.

    "What's sure is this also- Broadvision has plenty of customers, and they are under no obligation to reveal who is using the Clearvale platform."

    No, it doesn't have to reveal who its clients are, but it did, in the 10-K on page 4, reveal that Clearvale has generated no significant revneue to date. That's all that really matters. If BroadVision were gaining notable clientele, they would probably have included it in the PR. Since they didn't, I can only assume their clients are small businesses.

    "Last point- Broadvision is growing strong in Asia, where they will most likely obtain their best revenues"

    I would hardly call a 3% move higher in Asia/Pacific revenue strong growth.

    "The USA is not the only market in the world, nor is it even really the biggest/strongest economy in the world."

    Again... your sources are literally out of this world. The USA (for now) is the biggest economy in the world - and BroadVision's revenue fell 36% in the Americas.

    "Facebook is quickly fading from view of serious investors despite their much publicized IPO and filings, because we are understanding the nature of Facebook's fiscal strategy, which is based on targeted advertising. We don't want to be the commodity, so much so that we are willing to pay for a service which has respect for our privacy, our tastes, our likes, and our purchases"

    Facebook is fading from view? Facebook may be the most popular IPO debut since Google. How are 845 million registered users fading from view? Trying to equate Facebook to BroadVision is like trying to equate a Ferrari to a Tata.

    "Instead of constantly discussing the perceived value of the stock, perhaps the Motley Fool could discuss the pros and cons of the different business/social platforms, ie Jive vs Broadvision vs Yammer etc, and that will show that they actually research companies rather than just researching other financial consultants and their personalities"

    First idea I agree with... we should take a closer look at each of their platforms. But... we can't do that without ignoring BroadVision's terrible fundamentals. What good is the platform if the company running it has no clue what it's doing?

    "Jonathan Lebed is a smart cookie. He made millions of dollars as a teenager playing the stock market. Rather than that being reviled he should be admired to an extent. He figured it all out as a kid- while we are all trying to just survive in this bloody market..."

    A smart cookie? He's a convicted stock promoter who was forced to turn over $250,000 of his profits to the SEC. He should be reviled. He cost plenty of people money by artificially running up the price of companies he owned and selling them after these poor people had piled in. He has shown time and time again he has no fundamental basis for his claims. He's always on the lookout for his next pump and dump, and BroadVision appears to be it.

    Thanks for the comments.

    TMFUltraLong

  • Report this Comment On March 10, 2012, at 1:11 PM, TMFUltraLong wrote:

    warycarey,

    They have, which is and will continue to be to encourage companies to try their Clearvale Express for free (a free option to take an enterprise social networking "test drive" most other companies in this space don't offer) and then upgrade to the more complete paid Clearvale Enterprise. They are doing that now and have a solid plan to grow methodically and gain market share in this space, which is still, as we know, in it's infancy."

    Praying for an upgrade hasn't worked so far as is indicated by page 4 of their 10-K. Also according to their 10-K, it could be quite some time before any revenue from Clearvale is substantial. How exactly is that a solid plan for growth?

    "They also call out NIA and it's key people for being "stock promoters!!"

    Where exactly is this claim being made by BroadVision? The only claims Ive seen BroadVision make is that they're unaware of any corporate developments that would make their stock move as wildly as it has.

    " I wonder, does the author of this article have some connected friends who are short BVSN?"

    Neither myself, my family, or any of my friends to my knowledge have any material interest, long or short, in BroadVision. We value our Fool Disclosure policy around these parts =)

    "If any reasonably intelligent investor doesn't see how a secure, "Facebook" like platform at a company wouldn't focus employee productivity and idea sharing to maximize profit and that there is no clear leader in this wide open space curently, they are missing the boat."

    Here we go with the Facebook comparison again. Would it be OK to compare my local 9 year old baseball team to the NY Yankees, or perhaps race a VW Bug against a Ferrari??? The comparison is baseless.

    "Lastly, as far as it being futile for BVSN's CEO Dr. Chen to try to re-tool BVSN in another direction to focus on enterprise social networking and betting the farm on Clearvale..."

    That's my point, CEO Pehong Chen HASN'T re-tooled the company. It's been going in the same direction for more than a decade... downhill. Controlling so many voting shares means it's Chen's way or the highway.

    Thanks for the comments.

    TMFUltraLong

  • Report this Comment On March 10, 2012, at 5:14 PM, warycarey wrote:

    TMFUltraLong,

    Here you go again twisting things around. BVSN has had upgrades and they are being honest in saying it's going to take time to ramp up further, Just like when any company tries to break into a new sector. Dr. Chen started re-tooling BVSN to focus on enterprise social networking less than 3 years ago, not the 12 that you falsely imply. You call out NIA out for being stock promoters, BVSN didn't, yet your site is funded largely from, heaven forbid, stock promoters! I didn't compare BVSN to Facebook, I stated that a platform like Facebook's in the workplace that was secure (Facebook sells your personal info) that could increase productivity would be invaluable to companies. You twist it around and then make all your little league team vs NY Yankees comments to further your agenda which is to cover yours or your friends shorts on BVSN. 3 articles in one week bashing BVSN? Me thinks he doth protest too much!

  • Report this Comment On March 10, 2012, at 7:18 PM, TMFUltraLong wrote:

    warycarey,

    Right... the upgrades could take a very long time. As management stated, they're not sure when Clearvale will contribute any significant revenues whatsoever.

    Not only did I call out NIA for its continuous promoting, but I also called out Jonathan Lebed and AIDS for their part as well. The amount of misinformation pouring out from both ends is also manipulative to a point.

    Again... I, nor my family, nor any friends that I am aware of, have any material interest in either direction in BroadVision. I am simply stating what I see from the 10-K which is a gross difference from what NIA, Lebed and AIDS are putting out.

    TMFUltraLong

  • Report this Comment On March 12, 2012, at 11:10 AM, swanie5326 wrote:

    Geophysique/warycarey, thank you for your comments. I have been following NIA's website and reading their company profiles (potential stock earners). The articles and emails about BVSN have been very intriguing and seem to be logical and informative. I also enjoy reading The Fool and like many of the different stock picks they bring to attention. In using them to research BVSN I came across the above article by Mr. Williams. I'm not sure how much of what he has written I agree or disagree with, but I did find the title and article to be biased (which is not always a negative thing) and accusatory, while a bit short on objective reporting. But, it was enough to concern me about NIA and I did more research. I went back to NIA's webpage profiling different companies and pulled them all up one-by-one by to see how they were performing. Miserably, would be the word. I'm not saying anything, one way or another, about their potential, but they don't display good performance in any recent time frame. That said, everything I read makes BVSN look like it's more than worth watching closely. $35M spent in R&D for Clearvale at a time when they are backing away from their legacy products makes some sense out of their recent poor earnings. I'm not interested in using their dot.com era life as a reference for what they can do now. If enterprise social networking is truly about to explode, they appear to be very well poised, as pointed out in detail in NIA's reporting. In regards to Mr. Chen's retaining a large share, I am appalled by Mr. Williams comments. I AM a business owner. My way or the highway sounds really good to me. If you own a business, that's not a privledge, it's a right and it's your duty. Also, knowing that I am the proverbial Captain of the ship and am thus responsible for everything that happens is also saying, "You can hold me accountble" as opposed to the millions of blame-shifters in the business world. As to the issue of Mr. Ledbed, I found the following link and accompanying article to hold some water. Good luck to all with your investment choices.

    http://righteousinvestor.com/2011/04/01/jonathan-lebed-and-t...

  • Report this Comment On March 12, 2012, at 9:50 PM, baselineace wrote:

    There are many reasons to be bullish on this stock. The recent "pumping" has served to unlock the previously unrealized value in this stock.

    1. Strong vote of confidence: "CEO Pehong Chen still owns 1.6 million shares, or 36%, of the outstanding shares and has not filed to sell any thus far."

    2. On a P/S basis, BVSN is still half the price of JIVE, a member of the same peer group.

    3. This stock has a high short float and is vulnerable to short squeezes and upside momentum.

  • Report this Comment On March 14, 2012, at 4:35 PM, Vatirhea wrote:

    Aside from all the other information provided by your subscribers, it should be noted that Forbes published an article yesterday saying Microsoft is going to get into the Enterprise Social Networking (ESN) market.

    http://www.forbes.com/sites/markfidelman/2012/03/13/finally-...

    Earlier this year, Microsoft commissioned a Harris study that determined 75% of businesses either have or plan to adopt an Enterprise Social Network platform in 2012.

    Microsoft is behind the development curve and they currently don't offer an ESN platform, This is why Mark Miller, Director of Fpweb.net, says, "It’s good to see Microsoft finally acknowledge social in the enterprise, but in the past and going forward, I actually believe partners and 3rd party Independent Software Vendors (ISV’s) will fulfill that vision."

    Microsoft has a specific vision of what an ESN should be. "It is mainly comprised of four things: the cloud, social technologies, mobile and analytics." Coincidentally, the announcements made on Monday by Broadvision's CEO were about updates to BVSN's Clearvale Enterprise platform that made it the only ESN platform that provides all 4 of these elements.

    http://finance.yahoo.com/news/broadvision-transforms-way-com...

    http://finance.yahoo.com/news/broadvision-advances-social-bu...

    Wouldn't it be interesting if Broadvison became one of the key partners in developing Microsoft's new ESN that Mark Miller refered to? Wouldn't it be interesting if it wasn't coincidence that a tiny company like Broadvision is co-hosting this weeks Digital London Summit along side giant Microsoft?

    Regarding Microsoft's vision for their ESN, Microsoft's Jared Spataro stated, "For Microsoft, Azure and Office 365 will power the vision, enabling companies to easily and cost effectively support the next generation knowledge worker."

    As Monday's announcements by BVSN stated, Broadvision's Clearvale Enterprise now integrates Microsoft's productivity software SharePoint. So, all that is needed is to develop the interface between Azure and Office 365 with BVSN's Clearvale Enterprise ESN and deliver it in a Windows 8 and Metro Mobile format, then Microsoft's vision of the perfect ESN would be realised in relatively short order (relative to the amount of development needed for other ESN platforms).

    With Broadvision, it is all about the risk to reward ratio. Some investors are willing to take the short-term risk to position themselves for long-term upside potential. You clearly don't have the stomach for that sort of investment, but some people do.

    Your obsession with a small company like BVSN seems to be more of a personal vendeta against NIA than an attempt to give objective pros and cons for such an investment.

    I've been a subscriber to both the NIA and the Motley Fool for just a few months now. I've already made a good deal of money from the information I've received from the NIA, but I have yet to receive one bit of useful information from you.

    It seems to me your website and newsletter would be put to better use if you spent less time telling me how not to make money, and give me somehting I can use. Your friends are the one's that can be brutally honest with you, so as a friendly fool, let me say that you should stop with the petty bashing of your competition. It makes you look bad.

  • Report this Comment On March 23, 2012, at 5:24 PM, ejacob3 wrote:

    This stock was the victim of the infamous NIA (National Inflation Association). I was reading the emails early on when the stock was 8 dollars. I expected it to go to 18 and dump back again but was surprised to see it reach 40.

    They have a pump and dump strategy. I have watched them do it to a number of stocks such as MGN.

    I am certain they dumped their stock back in the 20 dollar range.

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