SeaChange buys into mobile market
SeaChange International is making its first foray into the mobile market with the acquisition of a small U.K. company. At the same time, it reported an increase in third-quarter earnings and profits.
The company SeaChange just bought is called Mobix Interactive; it provides software, content aggregation services and branded content for mobile phone operators. Though Mobix’s customers are based overseas, the move should give SeaChange experience with the mobile market, which its U.S. customers are preparing to enter.
Mobix’s customers include U.K. network operators 02 (Telefonica Europe plc) and 3 (Hutchison Whampoa), as well as Vodacom of South Africa. SeaChange said Mobix also has relationships with content providers Warner Music Group, Turner and MGM Universal.
SeaChange paid about $4.5 million upfront, though $1.5 million of that total is subject to certain closing adjustments. SeaChange might be on the hook for another $12.5 million over the next three years, however, based on Mobix achieving certain financial and commercial measures over that time span.
SeaChange President and CEO Bill Styslinger said: “This acquisition strengthens our Media Services segment by broadening the On Demand Group’s (ODG’s) video content service offering to include mobile applications. Mobix not only provides proven solutions to a new set of customers for ODG, but also allows ODG to offer one branded service across multiple platforms for many of its existing customers.”
SeaChange recorded that third-quarter revenue increased 6 percent from the year-ago Q3, to $51.8 million. Net income also crept up, from $3.3 million a year ago to $3.4 million in the quarter just completed.
SeaChange said Q3 revenue in its software segment was up 29 percent, to $37.6 million, largely due to Comcast renewing its master purchase agreement through 2009. The company said year-over-year revenue growth in the segment was also driven higher by advertising-insertion revenues from U.S. cable television customers, “resulting from a continued increase in high-definition television channel requirements.”
Styslinger said, “We continue to maintain a solid balance sheet with ample liquidity for future investments in the business.”
The company remains sanguine about the current fourth quarter. Styslinger said: “We continue to forecast fiscal 2009 revenue to be approximately 10 percent higher than fiscal 2008 revenue, and that we will be profitable for the fourth quarter. Our confidence in our fourth-quarter guidance stems from continued high levels of spending on VOD and advertising insertion software, primarily from North American service providers and our continued focus on minimizing growth in our operating expenses.”
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