Phorm cuts losses as it faces down criticism of 'big brother' technology

Phorm, the controversial behavioural advertising IT company, shook off the disappointment of failing to land a string of UK contracts by slashing its losses 40 per cent, and saying it has a "strong future" in its home market.

The technology group posted a $15m (£9m) operating loss in the six months to the end of June, down from $25.6m in the same period last year.

Phorm was forced to restructure earlier this year, reducing average monthly cash burn from $3.1m to $1.8m. It now has $30.1m in reserve after slashing costs and boosting operational efficiency and after raising $24.2m in June. This ensures Phorm will remain fully funded in the medium-term.

Chief executive, Kent Ertugrul, said the company was "making good progress towards the milestone of commercial deployment in a major market".

Phorm's technology tracks online browsing habits, allowing companies to tailor their adverts to users.

It sparked controversy after it emerged BT had been trialling the technology without informing customers. In the fallout, the telecoms giant put the contract on ice, saying it had "no immediate plans" to deploy Phorm's product. Carphone Warehouse's TalkTalk has cancelled a prospective contract completely, while Virgin Media said it is watching developments.

Insiders at the company said it was confident that UK groups would employ the technology once they saw it employed in other major markets. Phorm, which has its management team based in the UK despite being incorporated in Delaware, USA, said it currently has no contracts in the UK, but "remains in ongoing discussions with a number of UK ISPs and remains optimistic about our longer term potential in this market". The group is in talks with internet service providers in 15 other markets.

The technology is now being trialled by KT, the largest internet service provider in South Korea. Privacy campaigners have been critical but Phorm said its product was "misunderstood" and completely anonymous. The group has been hit by a further blow with the departure of Stratis Scelparis, the chief technology officer, who resigned earlier this month.

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