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Blinkx warns on first-half earnings, critical blog hits demand

(Adds details, analyst reaction)

LONDON, July 2 (Reuters) - Blinkx Plc (Other OTC: BLNKF - news) , which provides video search and advertising, warned on profit on Wednesday, blaming industry-wide concerns about the effectiveness of some kinds of Internet advertising, compounded by a critical blog about the company.

The British company said during the last three months it saw lower than forecast demand, resulting in a shortfall in revenue and earnings. It said core earnings for its first half to end-September would be about $5 million below its expectations.

"We attribute this performance to industry-wide issues of efficiency and effectiveness, which, in our case was compounded by the lingering effects of the disparaging blog," it said.

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A blog post by Benjamin Edelman from Harvard Business School raised concerns about the tech firm's business model in January, resulting in its shares losing as much as half their value. The company refuted his claims.

The stock, which was trading at 173.5 pence before the blog was posted, closed at 65.7 pence on Tuesday, valuing the company at 263 million pounds.

Analysts at Numis lowered forecasts after the warning, taking full-year revenue down to $268 million from $288 million and core earnings to $33 million from $43 million. (Reporting by Paul Sandle; editing by Sarah Young)