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Author Topic: Buyers Bailing on Istock  (Read 387831 times)

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molka

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« Reply #550 on: December 05, 2010, 06:33 »
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  I was a shareholder with Getty until about 6 months before they got taken out. The stock was climbing like mad until the last year before the buyout, but they started getting a lot of questions in the conference calls about RF taking away the RM share. At that time, Getty was trying to up the price of RF and got no where with that strategy. They came in with a couple of bad quarters and the stock fell through the floor. All this time, they kept saying that RF wouldn't hurt RM. Microstock wasn't an issue at that time, it was just declining revenue from RM. They didn't have an answer, so they just stopped taking questions. Most private equity firms try to turn a company in 3-5 years, after putting in new management and improving operations. That's the spin they will put on it for the roadshow- how they are positioned for growth with a profitable microstock model in a dominant position in the market. It's been off the analyst radar for so long they will only be able to judge the growth from getty's numbers. Anyone with an insight into the microstock business can see that Getty is sacrificing the future for the present jump in earnings, but no one on the street is going to say that, because Getty will sue them. ( it's happened to more than one analyst recently). The bottom line is that the present owners will cash out, and the new owners will wonder what happened in a few years. H&F knows they have to dump this company because it's a declining asset. It's just a question of waiting for the IPO market to heat up.

nice post. whether intentionally or not, it sums up and adresses number of things that I think are important.

 "All this time, they kept saying that RF wouldn't hurt RM." <->  "Microstock wasn't an issue at that time" <-> "just declining revenue from RM"

sure, there's no connection whatsoever. That's logical.

"sacrificing the future for the present jump in earnings"

That sums up micorstock. The "present jump" is exceptionally deceptive (if someone isn't very bright I guess) there becouse for most ppl getting involved it's an amazing jump: a jump from 0... or a jump from 'not even dreaming' that they could make money with their images. it's a bit amusing how those guys after being involved in it for a few years are complaining about dilution of sales value when they see trends like collages sold as one image... which is just a sub-scale repetition of what they started doing originally.


jbarber873

« Reply #551 on: December 05, 2010, 07:49 »
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Any thoughts on who would buy Getty/Istock?  I presume Corbis wouldn't be allowed to for competition reasons?  I think they would already own Getty if they thought they could buy them.

Perhaps with the poor economic situation, they could buy Getty and split it up, selling off some parts.

Who else is there?

   I don't think there will be a private sale. The likely players don't have the cash or available financing to pull it off. I think they will do an IPO- that is, a stock sale to the public. They will get a big investment firm, i.e. Goldman Sachs, to sell it. The Investment firm will be able to show off the incredible growth of the microstock model and Istock in particular. The raw numbers will back it up. All the things we complain about- taking 80% of revenue, etc, will be viewed as a selling point by the investment bankers. Tech companies have been leading the rally lately, and anything looking like a "social media" or "cloud based" company will look like the future. Google just offered $6bn for Groupon and got turned down! There have been bidding wars for esoteric cloud based companies recently, which points to a building market for IPO's. When they sell this, they will be selling Istock for the most part, with it's revenue growth numbers, it's commanding share of the market and it's low cost of goods sold. And to be honest, it's a compelling story. It will work, because the latest moves will boost the bottom line, and the buyers will infer that it is due to the improving economy. They will not be able to put together the back story because, after all, that's just professional photographers whining about how the world has changed. Do you think investors care? When the time comes to market this company, that "unsustainable thread" will be long gone, and Lobo will be playing "whack a mole" with every negative thread, leaving only the muffin tossers to make everything look peachy. Buy it on the open, sell it before the first quarterly results!

« Reply #552 on: December 05, 2010, 08:51 »
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I don't think there will be a private sale. The likely players don't have the cash or available financing to pull it off. I think they will do an IPO- that is, a stock sale to the public. They will get a big investment firm, i.e. Goldman Sachs, to sell it. The Investment firm will be able to show off the incredible growth of the microstock model and Istock in particular. The raw numbers will back it up. All the things we complain about- taking 80% of revenue, etc, will be viewed as a selling point by the investment bankers.
I doubt it very much. Getty & Istockphoto are now so intertwined that they cannot possibly be separated. They'd be in direct competition with each other so how could you place a value on their future earnings as individual entities? Impossible.

Istock on it's own might be worth about $1B today but H&F paid $2.4B for Getty as a whole. At the time they paid a 37% premium above the actual market value of Getty (i.e. the share price). I'm really not sure they could get their money back if they tried to sell today. An IPO would normally require them to retain a significant chunk (up to 49%) of the company anyway for the confidence of investors. Investors aren't going to flood in if it looks like H&F are tryng to run away from Getty.

I think H&F might already be regretting the day they bought Getty. It could prove difficult to shift especially in today's more cautious market. They biggest problem I see is ... who's going to buy it and why?

lagereek

« Reply #553 on: December 05, 2010, 09:01 »
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Plus the fact that all creative services, including all Ad-agencies, etc are right now lowest in demand for investors, on a global scale.

« Reply #554 on: December 05, 2010, 09:02 »
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Plus the fact that all creative services, including all Ad-agencies, etc are right now lowest in demand for investors, on a global scale.

Exactly.

jbarber873

« Reply #555 on: December 05, 2010, 09:50 »
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 @ Gostwyk-  When i said they would be selling Istock, I meant that's the "hook" to the story. The entire enterprise will be sold. The investment bankers will focus on the Istock part of the business as where the future growth will come from. the rest of the company will be looked upon as an extra cash generating part of the company ( not profits, but cash flow). They will calculate the numbers in such a way as to give the investor the impression that they are paying for Istock's growth prospects and the rest of the company is more or less free. This is how investment bankers sell a product. And I don't doubt that H&F regrets buying Getty. But right now, they have to get as much out of this as they can, and the only likely buyer is the public. They overpaid, but that was then and this is now.

@ lagereek- I don't think this will be an ad agency story as much as a "crowdsourcing, cloud based, social media" story. I'm not saying it makes sense in reality, but that doesn't stop an IPO when investors are looking for return.

I've done shots for prospectuses, annual reprts and IPO's all my life, and I've seen how these guys work. The broker just needs a one paragraph "story" to lay out to his client. The chance to get in on a growing "new media" company always brings in the cash. Where else will you put your money- in T-bills at 0.78 percent? Anyway, just my opinion, but I don't see any other way forward for these guys. They are kind of out of choices with an asset whose value will diminish over time. They didn't see microstock coming, but they see it now.

lagereek

« Reply #556 on: December 05, 2010, 10:16 »
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Yeah I know what you mean. Ofcourse, this is all speculation, they might not wanna sell the damned thing at all. I suppose Getty still is a name in its own right but I tell you, it will take some awful clever doing selling this thing.

jbarber873

« Reply #557 on: December 05, 2010, 10:30 »
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Yeah I know what you mean. Ofcourse, this is all speculation, they might not wanna sell the damned thing at all. I suppose Getty still is a name in its own right but I tell you, it will take some awful clever doing selling this thing.

I totally agree.

« Reply #558 on: December 05, 2010, 12:15 »
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Funny thing is when H&F paid $2.5B for Getty they'd have been hoping to flog it on around now for about a 50% profit. I don't thing anyone's going to hand over $3.6B for Getty any time soon.

« Reply #559 on: December 05, 2010, 12:19 »
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Here's another happy customer from IstocKphoto. Not.

"$4215 bucks. That's the amount of money we have spent with iStock since July 2008. Here's a little look into the past:

In July 2008, my biggest gripe about iStock was that the search function did a horrible job of returning relevant results, mostly because of keywords spammers. iStock realized this and worked very hard to fix it. I can attest that by 2009 it was much better; much easier to get useful results.

In September 2009, my biggest gripe about iStock was that there were too many awesome photos. Sensory overload! Life was good.

In November 2010, I am so frustrated with the lolly-gagging and excuse-making regarding the current site "improvements" and changes, that I am honestly considering signing up for an account at another microstock site for THE. FIRST. TIME. EVER.

Fix the search! No more excuses! No one cares about empty statements like "We are getting really close." If you couldn't make the new site work *at least as good* as the old site, then you didn't have any business launching a new site. Waste of time, resources, and your money (which iStock seems to be in dire need of right now.)"

SNP

  • Canadian Photographer
« Reply #560 on: December 05, 2010, 12:41 »
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someone already started a thread about that customer FYI.

oh gawd, if apple buys us...will we then be iiStock?

there are a few people over here who are so knowledgeable about economic/business analysis. unfortunately those same people are so emotionally biased against Getty/iStock that the analysis is insubstantial. why is that bias necessary if the writing is so clearly on the wall?

jbarber873

« Reply #561 on: December 05, 2010, 14:01 »
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someone already started a thread about that customer FYI.

oh gawd, if apple buys us...will we then be iiStock?

there are a few people over here who are so knowledgeable about economic/business analysis. unfortunately those same people are so emotionally biased against Getty/iStock that the analysis is insubstantial. why is that bias necessary if the writing is so clearly on the wall?

What bias? That the enterprise value of Getty has clearly declined? You may love istock emotionally, but this is about numbers. H&F overpaid and now has the task of getting out with the smallest haircut. Gostwyck is correct that you can't get high numbers unless you have the earnings. Istock can be profitable without the enterprise value of Getty coming back to the buyout price, because that price was based on the RM numbers, which have evaporated. You  misunderstand my point. I agree that the model that Istock created will dominate for the next few years, but the money that it generates does not support the price at which Getty was taken out. It's just math, not emotion.

« Reply #562 on: December 05, 2010, 14:16 »
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Apparently the truth has an anti-iStock bias. :D

SNP

  • Canadian Photographer
« Reply #563 on: December 05, 2010, 16:55 »
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someone already started a thread about that customer FYI.

oh gawd, if apple buys us...will we then be iiStock?

there are a few people over here who are so knowledgeable about economic/business analysis. unfortunately those same people are so emotionally biased against Getty/iStock that the analysis is insubstantial. why is that bias necessary if the writing is so clearly on the wall?

What bias? That the enterprise value of Getty has clearly declined? You may love istock emotionally, but this is about numbers. H&F overpaid and now has the task of getting out with the smallest haircut. Gostwyck is correct that you can't get high numbers unless you have the earnings. Istock can be profitable without the enterprise value of Getty coming back to the buyout price, because that price was based on the RM numbers, which have evaporated. You  misunderstand my point. I agree that the model that Istock created will dominate for the next few years, but the money that it generates does not support the price at which Getty was taken out. It's just math, not emotion.

good post. and I agree this has nothing to do with emotion....love or otherwise. despite my *love* for many aspects of iStock, the bottom line is what's best for my (read contributors in general) career. I'm exclusive as long as it works for me. friendship etc., aside. that's a separate issue and has nothing to do with what's best for my career. I won't be standing on deck playing a violin going down with any ship out of principle.

I can't argue your expertise. I find yours and others' posts very informative. I just think that you have no more access to numbers than anyone else, especially since getty went private. there could be (ARE) factors unknown to you and all of us. I think I would buy into the arguments more if they weren't so devoid of the possibility of being incorrect.

a thorough analysis should offer a referential viewpoint and acknowledge what it doesn't include. that's the main issue I have with this sort of conjecture. you can't just extrapolate based on data that are at least a few years old.
« Last Edit: December 05, 2010, 16:59 by SNP »

jbarber873

« Reply #564 on: December 05, 2010, 20:39 »
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  ^^Being closely held prevents any accurate analysis of the actual numbers, but the overall direction of pricing has been markedly down. The new markets that have opened are operating at far smaller absolute numbers, so even with the expansion of the market, I would be very surprised to see higher revenue, never mind profits, than in the past. Again, one can hope that Getty has in fact made a whole lot more money recently than in the past, but that flies in the face of all the other evidence that is apparent. Let's hope that your dreams come true, and Getty turns out to be fabulously profitable. Then I still go back to my original position- buy on the rumour, sell on the news. ;)

SNP

  • Canadian Photographer
« Reply #565 on: December 05, 2010, 22:30 »
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buy on the rumor, sell on the news.....lol....I love that saying. haven't seen it in awhile. well, it's all food for thought in any case...

lisafx

« Reply #566 on: December 05, 2010, 22:34 »
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Jbarber873, I find your analysis of the situation really interesting and completely plausible.  I don't know what your day job is, but it seems obvious that you are quite familiar with the workings of private equity companies, finance, and the stock market.  

Thanks for taking the time to distill the situation into layman's terms.  I suspect we will be getting the next phase in this saga sooner rather than later.  Probably by mid 2011.  It will certainly be interesting to watch it play out.

And I bet you are going to be able to do the "I told you so" dance, Jbarber :)

lagereek

« Reply #567 on: December 06, 2010, 01:53 »
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Jbarber873, I find your analysis of the situation really interesting and completely plausible.  I don't know what your day job is, but it seems obvious that you are quite familiar with the workings of private equity companies, finance, and the stock market.  

Thanks for taking the time to distill the situation into layman's terms.  I suspect we will be getting the next phase in this saga sooner rather than later.  Probably by mid 2011.  It will certainly be interesting to watch it play out.

And I bet you are going to be able to do the "I told you so" dance, Jbarber :)

Jbarber873, certainly is eloquent, mastering the English language to perfection, I bet he is either a Financial-analyst or Journalist. crap! I lived in London for 25 years and New-York for 7 years and my English isnt half as good as his.
« Last Edit: December 06, 2010, 01:55 by lagereek »

jbarber873

« Reply #568 on: December 06, 2010, 06:17 »
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Jbarber873, I find your analysis of the situation really interesting and completely plausible.  I don't know what your day job is, but it seems obvious that you are quite familiar with the workings of private equity companies, finance, and the stock market.  

Thanks for taking the time to distill the situation into layman's terms.  I suspect we will be getting the next phase in this saga sooner rather than later.  Probably by mid 2011.  It will certainly be interesting to watch it play out.

And I bet you are going to be able to do the "I told you so" dance, Jbarber :)

Jbarber873, certainly is eloquent, mastering the English language to perfection, I bet he is either a Financial-analyst or Journalist. crap! I lived in London for 25 years and New-York for 7 years and my English isnt half as good as his.

  No. I'm just a lowly photographer, but I've worked with these people all my life. A still life shoot can be very boring, so i ask a lot of questions from the client, and they are happy to talk. I've seen them do this over and over.

SNP

  • Canadian Photographer
« Reply #569 on: December 06, 2010, 10:01 »
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Jbarber873, I find your analysis of the situation really interesting and completely plausible.  I don't know what your day job is, but it seems obvious that you are quite familiar with the workings of private equity companies, finance, and the stock market.  

Thanks for taking the time to distill the situation into layman's terms.  I suspect we will be getting the next phase in this saga sooner rather than later.  Probably by mid 2011.  It will certainly be interesting to watch it play out.

And I bet you are going to be able to do the "I told you so" dance, Jbarber :)

Jbarber873, certainly is eloquent, mastering the English language to perfection, I bet he is either a Financial-analyst or Journalist. crap! I lived in London for 25 years and New-York for 7 years and my English isnt half as good as his.

I think you manage to get your points across rather clearly Christian  ;D

lisafx

« Reply #570 on: December 06, 2010, 11:57 »
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  No. I'm just a lowly photographer, but I've worked with these people all my life. A still life shoot can be very boring, so i ask a lot of questions from the client, and they are happy to talk. I've seen them do this over and over.

Darn, I need to get a better class of clients! ;)

However you came by your understanding of finance, I am glad you are sharing it here. 

jbarber873

« Reply #571 on: December 06, 2010, 17:36 »
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  No. I'm just a lowly photographer, but I've worked with these people all my life. A still life shoot can be very boring, so i ask a lot of questions from the client, and they are happy to talk. I've seen them do this over and over.

Darn, I need to get a better class of clients! ;)

However you came by your understanding of finance, I am glad you are sharing it here. 

 As I posted in another thread, one of the things I really like about microstock is that NO CLIENTS come to the shoot.  ;D

SNP

  • Canadian Photographer
« Reply #572 on: December 07, 2010, 12:18 »
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 :D

« Reply #573 on: December 07, 2010, 20:52 »
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If this is not the tipping point, I suspect that will come in January.  Kelly has promised the exclusives they will all be making more money.  Since royalties are being cut, that additional money will most likely come from yet another price hike...


well they can always cut more royalties from non-exclusives and give it to the exclusives

« Reply #574 on: December 07, 2010, 22:13 »
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Any thoughts on who would buy Getty/Istock?  I presume Corbis wouldn't be allowed to for competition reasons?  I think they would already own Getty if they thought they could buy them.

Perhaps with the poor economic situation, they could buy Getty and split it up, selling off some parts.

Who else is there?

It will be Google - mark my words!!


 

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