For some investors, respected chief executive Elizabeth Buse was the last good reason to stand bytroubled mobile payment stockMonitise (LSE: MONI). Now she isoff, tobe replaced bydeputy chief executiveand chief commercial officer Lee Cameron at the end of October. She may be leaving for personal reasons, but, after barely six months in the job, this is yet another sign that Monitise isout of luck.
Market Buse
It was former Visa executive Ms Buse whodirectedthe companys shift away from upfront software licensing to a subscription cloud-based mobile money platform, astrategy that hasnt paid off yet. Yesterday,Monetise reported a worse-than-expected pre-tax loss of227.4m against just a 63.4m loss in the previous year. Year-on-year revenues slid 6% to 95.1m andseem unlikely to grow this financial year. The companys share price plunged more than50% on the news. Over 12 months, it is down 93%.
The days when investors dreamed that this would be a multi-bagging growth machine are a world away. Right now, survival is the priority.
Mobile Money
Monitise once raised hopesby stealing an early march in a boom market.In the US, mobile payment volumes are expectedto climb from $37bn this year to$808bn by 2019, according to BI Intelligence. The UK is likely to follow a similar trajectory. The question now is whether Monitise will also climb, or fall by the wayside.With the share price at a six-year low, markets suspectthey know the answer.
The rapid growth of mobile payments has turned out to be more of a blessing and a curse. Monitise has found itself overshadowed byglobal behemothssuch as Apple,Google and Samsungwhose pockets seem bottomless in comparison to Monitises threadbare linings. It is down to its last 88.2m.
Burn Baby Burn
Monitisealso appears to have made mistakes, reportedly souring relations with investor Visa by also launching a tie-up with rival MasterCard. The companysshare price took a hitwhen Visacut its stake in July. US hedge fund Omega Advisors has also been rushingtowards the exits.
I had hopes that Monitise would become that rare breed, a British technology powerhouse, but maybewe have to accept that we just cant compete at this level. Hope springs eternal and some analysts are still looking at the bright side, noting that its market cap of 61m is worth less than its remaining 88m cash pile. Just remember, that cash pile is rapidly running down it was worth 146m just one year ago, although the burn rate is expected to slow.
Off The Money
Time and money are against new boss Cameron as he tries to temptnew customers into the cloud. Just two have signed up so far and neither has rolled out the technology. This doesnt look good. Futurecustomers may be put off by the companys deepeningplight. So, it seems, have potential takeover bidders.
Buse isnt the first Monitise casualty. Founder and co-chief executiveAlastair Lukes left following a strategic review last year. Hopefulcontrarians whodecide that now is a good time to buy must accept the dangerthat they maybecome a casualty as well.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.