Is Now the Time to Buy Vringo?

2012 was a year of ups and downs for Vringo (NASDAQ: VRNG  ) . The mobile entertainment company's stock price hit an all-time high, but the thrill of victory may have been soured slightly by patent suits with AOL and Google. Now, with rumors that billionaire Marc Cuban has raised his Vringo stake, now may be the perfect time to start paying attention to this company. Let's take a closer look at the nitty-gritty details and see if Vringo is a diamond in the rough.

Just the financials, ma'am
Vringo has impressively increased its annual revenue more than 34 times over from 2009 to 2012. However, judging from the income statement, Vringo hasn't been able to retain any of its earnings. After making $718,000 in 2011, Vringo's income was immediately swallowed up by research and development, as well as selling, general, and administrative costs, which totaled to over $6 million. Vringo has suffered negative net earnings for the past three years, and the devastation has put its cash flow statements, as well as its balance sheet, firmly in the red.

Social networking
Despite dismal financials, Vringo has made some great networking decisions. Through its Facetones application, which lets users put their Facebook (NASDAQ: FB  ) friends' faces in automated video slideshows, the company has been able to forge a business relationships with a dominating force in social media.

Vringo has also garnered attention from an impressive market mover-and-shaker. In early February 2013, Dallas Mavericks owner Mark Cuban raised his holdings from 1.03 million shares to 1.13 million. 

Facebook offers a platform for Vringo to reach an enormous base of potential customers. However, Vringo's relationship may also lead to the company exclusively relying on Mark Zuckerberg's brainchild, and as history has shown us with fellow coattail-clinger Zynga, this could end up turning toxic for Vringo. Still, it never hurts to get a leg up from a website with 1 billion users.

Vring-a-ding... dud?
Right now, Vringo is a cheap stock that is certainly turning some heads. However, the amount of red on the books suggests that Vringo's financial structure is much more flimsy than its shiny, attention-grabbing surface. Like a car with a bad skeleton, this company needs to get its dents thoroughly worked out before it can be considered a good investment. Make sure to take a good look under the hood before taking the plunge with this one.

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Read/Post Comments (7) | Recommend This Article (1)

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 February 25, 2013, at 6:06 PM, PAW57 wrote:

    How? What? David....Tom....really? Caroline's "article" here makes me wonder why I'm a Motley Fool Stock Advisor Subscriber. There's not a person on this earth in VRNG for the Facetones application. It's all about trolling and any self-respecting blogger would know that. This is scary.

  • Report this Comment On February 25, 2013, at 7:10 PM, clifffiscal wrote:

    "Nitty-gritty details" are missing! How does one talk about VRNG and not mention the patent infringement suits with Google, Microsoft and ZTE?

  • Report this Comment On February 25, 2013, at 8:17 PM, itzscott1 wrote:

    Wow.... This has to be the Hindenberg of Vringo articles. A disaster start to finish. Facetones? Really?? Nothing else??? Lawsuits against Google, Microsoft, ZTE and more to come?

    This author fails on all counts. F-

  • Report this Comment On February 26, 2013, at 8:30 AM, taishiba wrote:

    hahah, what a joke, sad indeed. F---

  • Report this Comment On February 26, 2013, at 2:43 PM, SamFreedom wrote:

    Stupid bastards. A non stop flow of ignorance coming from this site, over and over and over. Where's the "health bureau chief" to bash ARNAtoday?

  • Report this Comment On February 26, 2013, at 2:46 PM, lindygold wrote:

    Not being a paid subscriber to any of the MF premium services, I continue to search for a reason to open my wallet. ... still searching.

  • Report this Comment On February 27, 2013, at 6:34 PM, MFMotleyStool wrote:

    Wow. This takes the cake for ignorance in an article. Seeking Alpha always gets a bad rap but it's a lot better than the articles I see coming from Motley Fool.

    Fool on indeed, at your own peril.

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