Ad tech company Phorm has gone bust and investors stand to lose every cent of the $284 million sunk into it

Closed sign
Closed sign

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Phorm has closed down.

Phorm, an Aim-listed online advertising technology specialist that once boasted deals with Britain’s biggest broadband providers before it was engulfed by a privacy scandal, is to cease trading with investors due to lose every penny of the £201 million ($284 million) sunk into it.

The directors said they were pulling the plug “in light of the company’s uncertain financial position, lack of trading activities and absence of any suitable funding”.

Shareholders will get nothing from any administration or liquidation, they added. After by repeatedly tapping investors for cash while accumulating total losses of around £250 million ($353 million,) Phorm was forced to turn to high interest loans to stay afloat. Those have also now been spent, leaving the company without a website because it is unable to pay the hosting bills.

Phorm also said that its broker, Miribaud Securities, had resigned and its shares, suspended in February, will be automatically cancelled as a result.

It marks the end of a spectacular fall from grace for Phorm. At one point in 2008 its shares were changing hands for more than £35 ($49.52) after it announced deals with BT, Virgin Media and TalkTalk to install its technology on their broadband networks.

The system aimed to intercept and analyse millions of Britons’ web browsing, building a profile of their interests that would allow Phorm to replace web advertising banners with more targeted messages. The company aimed to share the spoils with broadband providers and publishers keen for a taste of the riches being swept up by Google.

But the plans prompted an outcry from privacy campaigners and legal experts, who claimed Phorm’s technology amounted to an unlawful wiretap. The controversy exploded when it was revealed that BT had secretly run trials on tens of thousands of customers without their consent.

It led to questions in Parliament and at EU level, and eventually a change in interception law. By then Phorm had been dropped by its UK partners and moved its headquarters to Singapore. From there it cast around the world for new business in Turkey, China, Brazil and elsewhere, but to no avail.

Over the last four years its total revenues were $740,000 (£523,000), versus losses of $208 million over the same period.

According to data from Dealogic and company disclosures, since Phorm appeared on Aim in 2007 it has raised $286m (£201 million) from investors.


This article was written by Chief Business Correspondent and Christopher Williams from The Daily Telegraph and was legally licensed through the NewsCred publisher network.

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