Since late 2005, shares of Convera
On Tuesday, Convera reported its fiscal-second-quarter results. Revenues came in at a mere $255,000, up about 275% year over year. Keep in mind that one customer accounted for 92% of revenue. Despite the growing sales, the company's hemorrhaging on the bottom line. Despite slashing costs over the past year, its fiscal Q2 net loss was still $6 million, or $0.11 per share.
In March, Convera agreed to sell its RetrievalWare enterprise search business to Fast Search & Transfer for $23 million, giving the company a current cash balance of about $54 million.
Convera's core product is a search platform for website publishers of trade business publications. The system helps customers build loyal user bases and expand advertising opportunities. For the most part, Convera gets anywhere from 20% to 50% of customers' advertising revenues.
Convera is targeting a large market opportunity. According to Convera, the online business-to-business market in the U.S. and U.K. was $3 billion in 2006, and it's expected to grow to $6 billion by 2010. But the competition is intense, with players like Google
Convera has good technology, and it's beginning to win over customers, with 41 Convera search sites in the pre-launch phase. However, it's unclear how much revenue these sites will generate, and what size their margins will be. In truth, Convera's just a start-up, which spells considerable risk for investors.
For more Foolishness:
Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,878 out of more than 65,000 in CAPS. The Fool's disclosure policy always knows where to find itself.