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News summary for 10/29/07

Mon, 10/29/2007 - 9:52am
CED staff

Verizon’s revenue rises despite one-time charges 
By Mike Robuck

Verizon Communications’ third quarter results were paced by an increase in its wireless subscriber growth, but its profit fell by a third when compared to a year ago due to one-time charges and merger related items.

Verizon’s third-quarter net income from the July-September period was $1.27 billion, or 44 cents a share, compared to $1.92 billion, or 66 cents a share, year ago. The 34 percent drop was partially due to expenses related to a minority investment in Vodafone Omitel.

Verizon Wireless, which Verizon jointly owns with Vodafone, added 1.8 million net retail customers in the quarter for a total of 63.7 million subscribers.

Verizon added 202,000 new subscribers to its FiOS video service in the third quarter for a total of 717,000 video customers. Verizon has a total of 1.5 million video customers through its arrangements with satellite providers. On the high-speed data side, Verizon added 229,000 new FiOS Internet subscribers.

During a Monday morning conference call, Verizon COO Denny Strigl said that Verizon expects to post a profit in 2008 on its FiOS services before interest, tax, depreciation and amortization.

“Our third-quarter results show that we have hit our stride as a leading wireless, broadband and enterprise company," said Verizon chairman and CEO Ivan Seidenberg, in a prepared statement "In recent years, we have transformed our business model and revenue base. Our results throughout 2007, and especially in the third quarter, show that our strategy has been successful.  We expect to build on these results in the fourth quarter and beyond."

Verizon bought back almost $800 million of its shares in the quarter and plans on buying back an additional $500 million to $2.5 billion this year.

Report says Parsons ready to step down as Time Warner CEO
By Mike Robuck

Richard Parson’s five-year reign as the CEO of Time Warner could come to an end as early as next week, according to a story published Friday by the Times of London.

The speculation about Parson’s retirement next week stemmed from a board meeting in London on Wednesday and Thursday. Parson’s current contract is set to expire in May of next year.

In the past, Parsons has publicly advocated that COO Jeff Bewkes be his replacement at Time Warner. If Bewkes does succeed Parsons, there has been speculation that he would be open to breaking up the current structure at Time Warner, which could include the sale or complete spin-off of AOL and Time Warner Cable.

YuMe selling, serving ads for Dave Networks
By Traci Patterson

YuMe Networks has signed an agreement to sell and serve ads for Dave Networks, a digital media technology platform provider.

Dave's peer-to-peer (P2P) IPTV system provides a video distribution, social networking and blogging platform. The technology allows media outlets to utilize user-generated content (UGC).

YuMe organizes online video content into ad-ready channels for targeted ad placement, and the company allows advertisers to buy specific cross-channel audiences. With YuMe, Dave and its advertisers will be able to ensure brand safety, contextual relevance, controlled syndication and consistent delivery across all digital media platforms.

YuMe will also serve ads into Next.TV, an Internet TV service with a P2P IP system powered by Dave. Next.TV is pre-installed on most Hewlett Packard (HP) notebooks and is available as an update for other models; a downloadable non-HP version will be available later this year.

YuMe offers a brand-safe advertising experience that can be delivered to any device - the PC, TV, mobile handset and more - whether streamed or downloaded. Microsoft recently announced that it is teaming with YuMe to offer broadband video advertising capabilities for the beta trial of its new Windows Media Center Internet TV service.

Comcast, Turner add to Vitrue’s $10M funding round
By Traci Patterson

Vitrue Inc. has closed a $10 million Series B round of financing, with continued participation from Comcast Interactive Capital and Turner Broadcasting.

Vitrue’s branded, video-centric social media sites enable consumers to create, edit and submit videos and content, and the company’s review and approve module allows customers to ensure brand safety standards for all posted content.

“By embracing video as an important component of social media, Vitrue’s customers are changing the way they interact with their audiences,” said Reggie Bradford, Vitrue’s CEO. “While it’s exciting that we’ve attained a leadership position, our strategic investment partners are going to be key to helping us achieve the next level of success.

The funding round was led by Dace Ventures and also saw General Catalyst Partners participate. David Andonian, the founder and managing partner of Dace Ventures, will join Vitrue’s board of directors.

Hulu beta begins testing Internet TV, movie content
By Traci Patterson

Hulu.com, the online baby of NBC Universal and News Corp., has begun private testing with select users at its Web site. Hulu is also launching videos to the sites of its five distribution partners: AOLComcastMicrosoftMySpace and Yahoo!.

Hulu’s online video service offers viewers streaming, on-demand and premium programming on a free, ad-supported basis. Content includes full-length current and archived TV programming (such as “The Office,” “Bones” and “House”), as well as clips and an initial selection of feature films (such as “Sideways” and “Master and Commander”). thePlatform is providing content publishing and distribution services for the video venture.

Hulu has licensing deals with MGM Studios and Sony Pictures Television, as well as multiple broadcast and cable networks. NBC recently removed its content from YouTube in preparation for the Hulu introduction.

The company has also closed a $100 million investment from private equity firm Providence Equity Partners.

Covad sells for $300M
By Brian Santo

Covad Communications has found a buyer in Platinum Equity, which specializes in mergers, acquisitions and operations. Platinum will buy Covad for $1.02 a share, in cash.

That’s a premium of 59 percent from Covad’s closing price on October 26, and will amount to a little over $300 million. Covad’s board has accepted the offer; the deal is contingent on approval from shareholders and regulatory agencies.

Covad president and CEO Charles Hoffman said the offer was too good to pass up. “Furthermore, Platinum’s approach will bolster the successful execution of Covad’s business strategy while providing the resources and support necessary for sustained growth. We believe that the resulting increased market competitiveness, improved capital structure, and enhanced product and network capabilities best position our customers, partners, and employees for the future.”

Platinum says it invests in companies that tend to be in cash flow businesses, have strong brands, provide mission-critical services, and have non-core assets. It has built a portfolio of companies largely unrelated to each other, and has minimal experience with communications companies.

“Covad has a stellar reputation for quality and innovation, and is one of the premier providers in the broadband access market,” said Johnny O. Lopez, partner and head of global mergers and acquisitions for Platinum Equity. “There is opportunity for growth as the demand for high-bandwidth services continues to evolve, and we’re eager to help Covad drive that growth.”

NDS is on a roll; signs up two more customers
By Brian Santo

News Corp. subsidiary NDS Group announced first quarter revenue was up 25 percent from last year, to $204.9 million, and net income reached $46.2 million, up from $35 million a year ago.

NDS reported it had shipped 7.4 million active digital TV smart cards – a net add of 3.2 million - for a running total of 78.6 million activated cards; had a net add of 8.1 million middleware clients for a cumulative total of 69.9 million deployed; and a net add of 1.5 million DVR clients for a cumulative total of 8.8 million deployed.

The company also revealed the identities of two new customers: Bharti Airtel and Tianjin Broadcast & TV Network Co. Bharti Airtel, India’s largest cellular operator, is using NDS’ VideoGuard conditional access, MediaHighway middleware, and a customized electronic program guide (EPG) for its new direct-to-home satellite service. China’s Tianjin Broadcast & TV Network Co. Ltd., meanwhile, is working with NDS to develop a digital cable platform.

NDS chairman and CEO Abe Peled said, “Our business has seen continued strong performance across the board as our deliveries of new technology grew strongly and our deployments in developing markets continued to gather momentum. NDS continues to expand its R&D and delivery organizations across the world to meet customer demand for new projects, many of which will yield revenue only from the next financial year onwards. NDS is investing in R&D as well as selected acquisitions to ensure that it will be in a position to offer the leading solutions to its customers in the rapidly changing media delivery landscape.”

Telus, Cbeyond deploy Acme Packet products 
By Mike Robuck

Acme Packets started the week off with a couple of customer deployment announcements.

Canadian-based carrier Telus is using Acme Packet’s Net-Net session border controllers (SBCs) for its VoIP services and to secure its borders for trusted peering relationships with other domestic and international service providers.

Telus has laid claim to being one of the first major telecommunications providers in the world to deploy a leading-edge, IP-based next-generation network (NGN). This managed network now delivers voice, data and video applications throughout Canada.

Acme Packet’s SBCs are deployed at six sites in high-availability configurations across Canada to support both VoIP and interconnect services. Telus uses Acme Packet’s Net-Net Session Director for security and service reach maximization, and the Net-Net Session Router for call routing.

“We design our network to support customers’ needs well into the future,” said Telus CTO Ibrahim Gedeon, in a prepared statement “With Acme Packet, we created a core peering platform that is significantly cheaper to build and operate, while giving us critical security and control functions.”

Acme Packets also announced that Cbeyond was using Acme’s Net-Net SBCs to enhance its SIP trunking service. According to Acme, the company’s SBCs aid Cbeyond’s service by enabling NAT traversal, increasing reliability and providing additional security capabilities that protect Cbeyond’s VoIP infrastructure.

Cbeyond delivers integrated packages of communications and IT services to more than 31,000 small businesses throughout the United States.

“Our goal is to afford our small business customers with the same advanced technology and premium services available to large enterprises,” said Chris Gatch, CTO at Cbeyond, in a prepared statement. “Acme Packet helps us achieve this by providing the session border control solutions necessary to offer a highly interoperable SIP trunking service, while securing our network and reducing costs.”

Home phone line repairs slowed; Companies hit with big fines for late service calls
Copyright 2007 Gannett Company Inc.
Paul Davidson, USA Today

As phone companies spend billions on souped-up broadband and wireless services, they're struggling with basic home phone line repairs.

Several states have imposed or recommended huge fines against Verizon, Qwest and AT&T for forcing customers to wait for repairs.

Behind the trend is a shift of money away from shrinking landline businesses, say telecommunications analysts and worker representatives. "The money is going into the newer networks," says Debbie Goldman, research economist for the Communications Workers of America.

The average wait for land-line repairs for all phone companies rose 5.1% a year from 2000 to 2005, the latest data available, says the Federal Communications Commission.

In Virginia, the State Corporation Commission last month proposed a state-record $17.5 million fine against Verizon for failing to fix an estimated 170,000 phone outages within the required 24 to 48 hours in the first five months of 2006.

In a filing, Verizon concedes that building its FiOS fiber-optic network "affects Verizon's ability to meet" repair standards. Verizon is spending $18 billion to offer broadband, TV and phone services to 18 million homes by 2010.

In Maryland, Verizon missed more than 20% of its service appointments in five of the first six months of the year, the Maryland Public Service Commission says.

Robert Penfield of Phoenix, Md., says it took Verizon three weeks to restore his home phone service in July. Noting most people also have cellphones, Verizon's Harry Mitchell says, "Someone's phone service being out may not have the same critical element it did in the past."

In response, though, Verizon is assigning 50 fiber-optic technicians in Maryland to part-time repair duty.

Mitchell says similar steps are underway in Virginia.

New Mexico regulators in August fined Qwest $6.8 million for slow repairs in 2006. California regulators are proposing a $900,000 fine against AT&T for missing repair standards three months last year.

Qwest and AT&T largely pin the problems on heavy rains, an explanation regulators rejected.

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