Former high flier Blinkx predicts loss

LONDON, Aug 24 (Reuters) - Blinkx (Other OTC: BLNKF - news) , the video search and ad group valued at nearly 1 billion pounds ($1.6 billion) in 2013, said it would report an operating loss for the six months to end-September after trading deteriorated, sending its shares tumbling more than 30 percent to a five-year low.

The company said it expected to post a loss on its core earnings measure of between $5 million and $8 million, after it saw about a 60 percent decline in demand across its desktop and display ad products.

The group said it was focusing on mobile, video and programmatic advertising which tailors ads to the interests of users. It (Other OTC: ITGL - news) has launched a new programmatic ad platform, which it said significantly increases the quality of the advertising opportunities it offers to partners.

Blinkx has been badly hit in recent years by industry-wide concerns about the effectiveness of some types of internet advertising.

Its business model was put under a spotlight in January 2014 when Benjamin Edelman from Harvard Business School wrote a critical blog that questioned the value of the platforms the company provides, resulting in the shares losing as much as half their value. Blinkx rejected his claims.

The issue did not go away, however, and it was blamed when the group warned on profit in July 2014.

Monday's profit warning sent the stock to a five-year lows. The shares were trading down 32 percent at 18 pence at 0845 GMT, giving the group a market capitalisation of around 70 million pounds.

Analyst Thomas Singlehurst at Citi said profit warnings were becoming a common feature for Blinkx.

"This one is particularly painful because it represents the first time that Blinkx has moved into proper cash burn, which undermines the net cash balance as a support for valuation," he said. ($1 = 0.6361 pounds) (Editing by Paul Sandle)