BroadVision Demonstrates the Dangers of Self-Serving Newsletter Services

It's been two-and-a-half months since I last wrote about enterprise applications software provider BroadVision (Nasdaq: BVSN  ) , and wow have things taken a complete 180 since my last discussion.

As a quick recap, my biggest concern with BroadVision's 600% run higher was that it was fueled by a steady stream of speculative newsletters from the National Inflation Association. The NIA, over many months of releasing newsletters, as well as concurrently purchasing and selling BroadVision's stock (as it would disclose on its website), made claims that BroadVision had potential tie-ins with Facebook (Nasdaq: FB  ) and that its Clearvale software was on par with Jive Software's (Nasdaq: JIVE  ) enterprise platform and thus deserved a similar valuation.

These claims would come under fire on numerous occasions by bloggers, an upstart investment group known as the Association of International Deflation Society, and me. Now that trading has relaxed and the NIA has backed off its approach of backing BroadVision weekly through emails, we're beginning to see that those fears were well founded and that all of the warning signs have been in place from the start.

One warning sign I've been waving the yellow flag about for months has been BroadVision's deteriorating sales. In order for BroadVision to focus on its next generation of product, which is code word for the Clearvale enterprise platform, the company has had to invest heavily in its development, which has even included giving away the software for free. As its legacy product sales wind down with Clearvale producing no significant revenue to date per the company's quarterly filing, you can expect the 11-year sales decline to continue.

Another dead giveaway has been the success of BroadVision's peers while it continues to falter. Jive, for instance, reported a 58% rise in revenue in its latest quarter while gaining big, new customers with strong cash flow, including health-benefits company Aetna and online educator Bridgepoint Education (NYSE: BPI  ) , to name a few. Privately held companies like Yammer and Lithium Technologies are also signaling strong growth. As for BroadVision, its clientele list is made of up of much smaller and lesser-known companies.

This leads me to my final point: I think that the NIA's ideas were quite imaginative, but lacked true substance. I questioned the validity of the NIA's argument as early as February when it was discovered that there were possible tie-ins between the NIA and formerly convicted stock promoter Jonathan Lebed. Now that we can really make an apples-to-apples comparison between Jive and BroadVision regarding the quality of customers, as well as place BroadVision side by side with its public and private peers, it's become apparent how far behind the curve BroadVision is and ultimately how off-base the NIA's argument appears.

The truly sad part is that countless shareholders were suckered in for the ride and now are stuck in a position where they purchased shares at a much higher price with the promise of quick riches from the NIA.

But if there's anything to learn from BroadVision, it's of the dangers of non-reputable newsletter services. If you look at companies the NIA has endorsed previously, including BroadVision and Ocean Power Technologies, they have largely wound up trading lower within a few months following the NIA's endorsement. Not surprisingly as well, the NIA often holds large positions in the stocks it recommends prior to releasing its endorsement with the disclaimer that it can add and sell its position anytime it pleases. That makes me feel concerned for shareholders of the NIA's latest endorsement, Synacor (Nasdaq: SYNC  ) , a provider of online content and authentication services.

All I can say is, stay vigilant, be inquisitive, understand what you're invested in, and never be afraid to ask questions!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. 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.

The Motley Fool owns shares of Bridgepoint Education. Motley Fool newsletter services have recommended writing puts on Bridgepoint Education. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that always has your best interests in mind.


Read/Post Comments (11) | Recommend This Article (9)

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 May 25, 2012, at 12:10 PM, JimmyJJr wrote:

    You may be right about Broadvision, declining earnings,bad managment, not much fore site on how to handle big money(me either) but SYNC seems to be doing things right and in the sweet spot of whats happening today, these kinds of companies with proper management do very well on wall street untill someone comes up with something bigger or better. Untill that happens I am sticking with SYNC.

  • Report this Comment On May 25, 2012, at 12:19 PM, TrackUltraLong wrote:

    JimmyJJr,

    Synacor is profitable which is far, far cry from BroadVision. My concern simply stems from NIA's past history was is nothing short of dodgey. I'm concerned for what will happen to uninformed shareholders.

    TMFUltraLong

  • Report this Comment On May 25, 2012, at 12:38 PM, hjbrito wrote:

    I think everyone needs to visit NIA's website and see what information, videos and data they offer the public. Then visit Motley Fool's website and see what they offer. Then in the end, any reasonable minded and awake man who is paying attention to the economy (reality) can tell you who is really looking out for you and who is not. Here's a hint, try looking for positive info about gold/silver on Motley Fool's site. You'll be looking forever. I know, I've tried their special paid service. Within a month I knew I needed a refund. Stock advice appeared to be well researched, but no mention of real life at all. NIA is not very popular with any site or agency trying their hardest to keep Americans from seeing the dire straits our naton is in and keep them investing "business as usual" and finally, NIA spells it out at the end of their e-mails. Do NOT buy anything based on NIA's advise, research the stock on your own. Lastly, if everyone who bought into BVSN when NIA starting "pushing" the stock ($8) sold now, they would almost double their money still. If everyone who bought gold when NIA started "pushing" it (that I know of) 4 years ago, their investment would have more than doubled and almost tripled just months ago. Can't wait for Motley Fool to write an article blaming NIA for gold's recent decline. Just like Helicopter Ben, they'll probably say gold is not money. As for me, i'll continue to make my own mind up while taking in suggestions from everywhere. HB-Austin,TX

  • Report this Comment On May 25, 2012, at 12:51 PM, TrackUltraLong wrote:

    hjbrito,

    If you want bullishness on gold and silver, you need to look no further than TMFSinchiruna and myself:

    http://www.fool.com/investing/general/2012/04/23/how-low-can...

    http://www.fool.com/investing/general/2012/02/18/how-2250-go...

    http://www.fool.com/investing/general/2012/02/14/this-sector...

    http://www.fool.com/investing/general/2011/08/17/exclusive-s...

    That's just a small sampling. TMFSinchiruna (Christopher Barker) specializes in nothing but the metal mining sector. I tend to write about a wide variety of sectors but can think of no less than 15 bullish ive written about gold & silver recently. So honestly, you don't have to look too far if you want a bullish perspective on gold.

    My beef with the NIA is that despite their insistence that no one buy what they recommend, why BOTHER recommending it in the first place? My best guess is because they own shares and are trying to better their own interests.It's foolish to assume traders won't act on their apples-to-watermelons analysis and buy their flavor of the week stock; and to me, that just seems sad.

    TMFUltraLong

  • Report this Comment On May 25, 2012, at 7:35 PM, boho1234 wrote:

    You can bad mouth N.I.A. all you want,but by listening to them my portfolio is up a little over 100 percent,how do you like them apples?

  • Report this Comment On May 26, 2012, at 2:44 AM, sevenseaman wrote:

    If the returns are so great why is it that companies such as xdsl.ob which Lebed had touted a number of year's ago as its number one pick is still under a penny?

    For nearly a decade Broadvision has continued to face declines in revenue and also see competitors continue to gain market share, along with end users. Where was Broadvision during this recent dot.com boom especially in social media?

    By the time corporations figure out if ClearVale's freeminum model is worth paying for the growth in social media may come to a grinding halt.

    For the couple of posters who said that they have made money through their suggestions, what would have happened if you had followed the NIA and Lebed recommendations to load up over 40 dollars a share?

    I'm still sticking to the rational that everything was just a tout. And since Facebook IPO'ed what is the next area of growth for Broadvision?

    For a Broadvision to say that they are considered a start-up company they failed to tell their investors that most start up companies don't last.

    Since the CEO track record has taken a tremendous hit during the last decade don't expect a utopia to develop in the near-term and don't expect for green shoots for the future.

    And don't forget that the QuickSilver and K2 legacy products from BVSN have been losing customers to its competitors with more advanced and nimble platforms. Broadvision once lost its edge when it bet against Java, now it has lost its mojo by failing to develop a standout product in the competitive social media marketplace.

  • Report this Comment On May 30, 2012, at 12:42 PM, Boost930 wrote:

    I sure don't have any complaints. I'm up HUGE with my shares of SYNC. Thanks NIA!

  • Report this Comment On May 30, 2012, at 4:00 PM, BEErock24 wrote:

    Broadvison is still up like 40% from when the NIA newsletter recommended it! This fool is just bitter cuz he lost on his short. This article makes no sense...

  • Report this Comment On May 30, 2012, at 8:02 PM, informthemasses wrote:

    LOL, SYNC up 23% in the three trading days since this TRASH was written. Have fun eating those shorts!

  • Report this Comment On May 31, 2012, at 12:54 PM, reigngage wrote:

    Yeh, got into bvsn at 48 and still made 1500 kaish!

    I'm 'all in' on sync. 30k in a couple days ain't bad.

  • Report this Comment On May 31, 2012, at 5:20 PM, informthemasses wrote:

    Article should simply read.......

    DANGER DANGER DANGER. By following NIA's lead and buying on the dips and holding your position for 60-90 days you are at risk of making boatloads of money. Do NOT do this, only insiders are allowed to profit from this method.

    To all those reading this and prematurely shorting the stock...... THANK YOU Can't wait to take your money when your losses hit 100% and the margin calls come.

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