Phorm’s pre-tax loss reaches $48m

Online behavioural targeting company Phorm claims it has enough funds to continue running despite a pre-tax loss of $48 million.

The ad firm reported a pre-tax loss of $48 million for the year ending December 31 2008, compared with a pre-tax loss of $32 million in 2007, but says it will continue to trial its controversial technology.

Phorm’s share price dropped 27.5p (5.26%) in early trading today following its results announcement.

However, the company claims that “significant actions” taken in Q4 2008 means its monthly cash expenses have been reduced to $1.8 million, according to reports.

In a statement, Phorm said: “The directors have a reasonable expectation that the group has adequate resources to enable the group to continue in operational existence for the foreseeable future.”

A week ago, Phorm unveiled plans to sell a 19.4% stake through a new share offering in a bid to raise £15 million, in order to continue its trials with BT, TalkTalk and Virgin Media (see Phorm aims to raise £15m to continue trials).

The company has failed to bank any significant revenue from its trials so far – in 2007 Phorm spent $22.4 million and reported a $32.8 million loss.

However, today’s statement suggested the company has cash reserves of $24 million (£15 million), which has recently been boosted by investors.

Phorm has come under intense scrutiny over the past few months with the Open Rights Group urging companies such as Microsoft, Google and Facebook to block the online advertising system from tracking users (see Amazon blocks Phorm).

Earlier in the year, Amazon UK and Wikipedia both blocked Phorm from their portfolio of sites and the European Commission started legal proceedings against the UK over the behavioural ad company to address “several problems with the UK’s implementation of EU ePrivacy and personal data protection rules” (see European Commission begins legal action on Phorm).