Struggling company will turn it around, CEO says
The stock's in tatters, actually so much in tatters that has a 52 week high of $0.02 and is currently worth $0.002. The latest accounts show a net loss of $15,179,000 for the nine months to the end of September on revenues of $801,000 for the same period. And that's only good news because in the same period last year the company lost over $40m.
The previous CEO left earlier this year with a $187,000 pay off – half of which is still to be paid. You have a recent funding round of $2.1m to take you through to the new year, when the next tranche of funding is due. Finally, you have liabilities exceeding assets of $85,984,000.
The company is NeoMedia, known to the mobile industry as the company that delivers 2D bar code readers for phones, plus the attendant back office server software and technology for managing mobile marketing campaigns.
And yet CEO Ian McCready is confident that the company is on the cusp of a successful next year. Why?
Mobile barcode technology needs a barcode to read – usually sited on some promotional literature, the product or packaging itself, or in a newspaper or magazine. Then you need a reader on the phone, and a system that can then send the data from that barcode back to a server, delivering something relevant back to the phone.
NeoMedia develops the reader software for the phone, which can be downloaded as an application or integrated and embedded in the phone itself. It also markets sever software that hosts the campaign information and interacts, through a gateway, with the phone. Its campaign dashboard allows a brand or agency to look at metrics from the campaign, tracing clicks and demographics.
In the market so far, the technology used so far has tended to be proprietary, meaning that not all readers can read all barcodes, for instance. Also, each operator needs to have, or have access to, servers that can host the campaigns and respond to the data coming from the phone, meaning that in a given country, not all users could access barcode information, and even if they could scan the code using the phone, it might not interact with the campaign.
But in the past few months that has changed. OMA has defined the ecosystem, the actual parts of the industry that are needed to stitch together a standardised system, and is beginning to define the standards required. There are open standards 2D barcodes as well.
It is this growth in standards that McCready is positive about. He said that NeoMedia, previously known as a "patent troll" (his words, not ours) is now fully committed to licensing its IPRs on fair and reasonable terms, as part of its commitment to OMA and other standards bodies.
He also hinted that the company is close to deals to embed the technology in handsets, although it appeared this might be more likely to happen in US markets first. Handset makers could of course develop their own technology, but they need to weigh up the benefits of doing so, versus licensing solutions that already exists. McCready also claimed that Nokia's existing reader is "rubbish", and that the manufaturer is looking at how it will go forward in this area.
He also said that advertisers and agencies are beginning to see the advantages of the system, responding to its ability to offer clear data on who is responding to campaigns, and what they then do with that information.
Finally, operators themselves, who for the most part have not tracked this technology, all have it high up their "to do" lists, McCready claimed. In Europe McCready estimated there are currently 12 operators who have deployed mobile barcode systems, with a whole lot more looking at the technology. Recent tenders in Spain showed the way, he said, with operators producing common tender documents, showing a commitment to following a standardised process.
"We now have a complete suite of end to end products in this area, and have two customers about to deploy our complete suite," McCready said.
There is another headache for NeoMedia to deal with. One of its patents, which includes 97 claims, is being challenged by the EFF, and has been put under reconsideration by the US patent authority. This has meant that legal action against companies consider to be infringing its patents has had to be put on hold.
But McCready is confident that the EFF-led action will come to very little. NeoMedia considers rival company ScanBuy is infringing on 6 of its claims.
"We are committed to open and reasonable licensing of our patents," he said, "but that doesn't mean companies can just ignore us and go ahead anyway," he said.
So how long can NeoMedia wait for this market to show real returns? McCready admits that there is still consumer education to be done, so that users can get phones with good readers in them and then recognise what a 2D barcode is, and what to do. But he says that if things start to move within the next 12 months then NeoMedia will be able to deal with that. 36 months would be more problematic, he said.