Archive for the ‘Broadcast technology vendor financials’ Category

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Nov 10 2014

Broadcast graphics and MAM specialist Vizrt announced that it will be taken private in an all-cash deal that values the company at $374m.

The buyer is Nordic Capital, a leading Nordic PE firm with four active funds with over EUR 11 billion in total committed capital. Under the terms of the deal Vizrt will be merged with 24 October Holding AG, an entity indirectly controlled by Nordic Capital Fund VIII, and NOR Merger Sub Ltd.

The transaction values Vizrt at a 32% premium to the company’s closing share price November 7, 2014, the last trading day prior to the announcement of the deal, and a 35% premium to the company’s six months volume weighted average share price of the for the period ending on November 7, 2014.

“I and the management team are excited about the opportunities we all believe we have ahead of us,” said Vizrt CEO Martin Burkhalter. “Nordic Capital is very committed to support our growth strategy going forward. Being a privately owned company opens up for accelerated growth opportunities through, amongst others, future acquisitions that support our long-term strategy. The discussion management has held with Nordic Capital over the last few months gives us the necessary confidence that Nordic Capital will fully back-up our continuous efforts to stay ahead of the game by further strengthening our innovative capabilities.”

The deal is expected to close on or around January 31, 2015, provided all conditions for completion have been fulfilled.

Completion of the transaction is subject to the approval by a Shareholders Meeting of Vizrt by simple majority which is expected to be held on or about December 18 2014. Shareholders representing 51.5% of the total share capital of Vizrt have declared that they will vote in favor of the deal

“Our Board has undertaken a careful review of the terms and conditions of the Merger and is unanimous in its recommendation. We consider the cash based offer as fair and in the best interest of our shareholders. We believe that Nordic Capital, with its breadth of expertise and proven track record of developing companies, will be a strong owner of Vizrt.” stated Dag J. Opedal, Chairman of the Board of Directors of Vizrt.

The Company and Nordic Capital shall cooperate for a delisting of the Company’s shares from the Oslo Stock Exchange as soon as possible after the Merger becomes effective.

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Related Content:

Press Release: Nordic Capital to pay NOK 37 in cash per VIZRT Ltd. Share

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© Devoncroft Partners 2009 – 2014. All rights reserved.

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Avid Releases First Financial Results in Nearly Two Years, Revenue Down 11.4 Percent in 2013

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Sep 12 2014

Avid released financial results for the first time in nearly two years, following a protracted audit of it historic accounting treatment of software upgrades, dating back to 2009, which were made available to certain of its customers at no-charge.

The company has now completed the audit, and released financial results for both 2012 and 2013.  Avid has also released re-stated results for 2009-2011, which reflect the results of the audit.

For the full year 2013, Avid’s revenue was $563.4m, down 11.4% versus the previous year.

GAAP net income for the full year 2013 was $21.2m, down sharply from $92.9m in 2012. Non-GAAP income from continuing operations was $57.2 million or $1.46 per share. The company attributed the decline in revenue and net income to the larger portion of revenue from periods prior to 2011 being amortized in 2012 as compared to 2013 due changes in accounting rules.

The results for 2012 and 2013 are shown below, along with re-stated results from 2009-2011.

 

Avid restated earnings

 

“As a result of our restatement and in accordance with GAAP, revenue that had originally been recognized in earlier periods is now being recognized ratably over an extended timeframe,” said Avid EVP and CFO John Frederick. “The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount we historically recognized. There was no change to the cash characteristics of the transactions being restated nor to the Company’s liquidity directly relating to these transactions. As a result of the restatement, the balance sheet reflects a significant increase in deferred revenue, which will be recognized in revenue over a number of years and will provide significant visibility into our future revenues. The revenue recognized from deferred revenue originating in periods prior to 2011 will continue in declining amounts through 2016, creating downward pressure on revenue growth until 2017.”

“We have worked diligently for well over a year on the restatement and are delighted to have completed the process,” said Louis Hernandez, Jr., president and CEO of Avid. “Throughout this period, we have put a premium on maintaining our focus on continued innovation for our customers and reasserting our commitment to being a strategic leader for the media industry with our Avid Everywhere vision. I’m encouraged by the progress we’ve made in executing against our three phase transformational strategy, and specifically with the growth in bookings over the past few quarters. Now that we have completed the restatement process, we are excited to continue our work on the transformation and feel the momentum building.”

Following the filing of Avid’s first quarter 2014 financial report, Avid plans to apply for relisting on the NASDAQ stock exchange, and hopes to be relisted on the NASDAQ stock exchange sometime after becoming current with its SEC reporting obligations. In the interim, Avid stock will continue to trade on OTC Markets — OTC Pink Tier under the trading symbol AVID.

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Related Content:

Avid 2013 10-K Filing

Avid Nears Completion of Accounting Audit, Says Normal Financial Reporting Cycle to Resume in Q3 2014

Avid to be Delisted from NASDAQ on February 25, 2014

Avid Receives Anticipated NASDAQ Delist Letter

New Avid Rights Agreement Will Cause “Substantial Dilution” to Potential Acquirers

Avid Unlikely to Regain Compliance with NASDAQ Listing Requirements by March 2014 Deadline

Avid Technology and Computershare Trust Company as Rights Agent, Rights Agreement Dated as of January 6, 2014

Avid Receives Additional Notice of Potential NASDAQ Delisting

Avid Delays Filing of Q2 2013 Financial Results and Form 10-Q

New Avid Bonus Plan Contemplates “Reorganization Event”

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Download New Devoncroft Partners Report: IBC 2014 – Observations and Analysis of the Media Technology Industry

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, market research | Posted by Joe Zaller
Sep 09 2014

In advance of the upcoming IBC trade show in Amsterdam, Devoncroft Partners has published an analysis of the trends and strategic drivers in the broadcast and media technology sector.

A link to download this report can be found at the bottom of this page.

 

Devoncroft Partners – IBC 2014 – Observations and Analysis of Media Technology Industry (image)

 

The report covers and provides commentary on a variety of significant market trends, drivers, and events, including:

 

  • Review of recent significant industry developments, and thoughts on future trends

 

  • Financial performance of selected industry vendors

 

  • Business and technical observations from vendors end-users

 

  • Ongoing consolidation of end-users and vendors

 

  • Recent private placements, investments, and IPOs

 

  • The disruption of the TV business…. Still waiting

 

  • Selected vendor announcements

 

  • Broadcast industry trends

 

  • Where money is being spent in the broadcast industry

 

  • The “trend-spend disconnect”

 

  • Transition to IP – analysis of strategic drivers

 

  • Review of technology opportunities

 

  • Thoughts on the next big thing

 

 

Included in the analysis are excerpts from the 2014 Big Broadcast Survey (BBS), the largest and most comprehensive study of  technology trends, buyer behavior, and vendor brands in the broadcast and media technology sector.

We welcome feedback, comments, and questions on this report

If you would like to schedule a meeting at the IBC show, please let us know as soon as possible.  We are in the process of finalizing the IBC schedule for the Devoncroft team, and have very limited availability remaining.

We hope to see you in Amsterdam.

 

Please click here to download a PDF copy (5 MB) copy of Devoncroft’s IBC 2014 – Observations and Analysis of the Media Technology Industry (registration required).

 

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Related Content:

Devoncroft Partners: IBC 2014 – Observations and Analysis of Media Technology Industry (registration required)

2014 Big Broadcast Survey (BBS) Reports Now Available

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Evertz Reports Record Revenues for First Quarter of New Fiscal Year

broadcast industry technology trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Sep 09 2014

Evertz announced record revenue for the first quarter of its 2015 fiscal year of C$98.0m, up 54% versus the same period a year ago (a poor quarter for the company), and up 12.5% versus the previous quarter.

Net earnings for the quarter were C$19.7m ($0.27 earnings per share), an increase of 61.3% versus the first fiscal quarter of 2014, and an increase of 33% versus the preceding quarter. The company generated C$15.3m cash from operations in the quarter.  This compares to cash from operations of C$2.7m during the same period last year and negative C$1.3m during the previous quarter.

The revenue result is the highest in Evertz’s corporate history. It came in well above the consensus estimates of equity analysts, which were expecting revenue of $C91.7m and earnings of C$0.24 per share.

Evertz EVP Brian Campbell attributed the strong performance “to the ongoing transition to HD, channel proliferation, the increasing global demand for high-quality video anywhere anytime, to worldwide demand for Evertz’s comprehensive product offering with our optimized workflow solutions providing compelling value to customers and to the growing adoption of Evertz’s state of the art sports replay and our software defined video networking solutions”

Revenue in the US/Canada region was C$55.5m, up 55% versus the same period a year ago, and up 28.8% versus the previous quarter. US/Canada sales were 57% of total revenue during the quarter, up from 56% of revenue during the same period a year ago, and 49.5% of revenue last quarter.

International revenue was C$42.5m, representing 52% growth versus the previous year’s result and a slight decrease of 3.7% when compared to the previous quarter. International sales were 43% of total revenue, down from 44% last year and 50.5% last quarter.

The top ten customers in the quarter accounted for 31% of revenue (C$17.2m), and the largest customer in the quarter accounted for 6% of revenue (C$3.3m).

During the first quarter of fiscal 2015, Evertz had 86 individual customers each representing over $200,000 of revenue.

Gross margins in the quarter were 57.0%, down slightly from 57.5% last year and up from 56.3% last quarter. Evertz executives said that the gross margin performance in the quarter were within the company’s target range of 56% to 60%.  Consistent with recent calls, equity analysts asked both why the company’s gross margins were not increasing more rapidly with revenue growth, and what is required for gross margins to move to the high-end of Management’s target range.

While Management cited gross margins drivers of product mix, geographic mix, and the discounting of volume orders, the principal factor was the competitive pricing environment.  “We’ve been in a quite a competitive pricing environment for the last year, so there hasn’t been any significant change to that.” noted Campbell.

R&D expenses in the second quarter were C$15.8m, an increase of 18% versus the same period last year, and down 2.8% versus the previous quarter.  R&D expenses were approximately 13.6% of revenue in the quarter, lower on a percentage basis than last year (16.6%) and last quarter (15.8%) due to higher revenue.

Selling and administrative expenses for the quarter were C$13.4m, an increase of 16% versus last year, and a decrease of 18.8% versus the previous quarter. Selling and administrative expenses represented approximately 15.5% of revenue in the quarter versus 20.5% of revenue during the same period last year, and 18.9% of revenue last quarter.

The company said that its shipments in August 2014 were C$25m, and that its purchase order backlog at the end of the quarter was in excess of C$46m.

The company ended the quarter with $103.4m of cash and short term investments up slightly from C$102.0 at the end of last quarter.

There was some additional commentary provided during management’s exchange with equity analysts:

Thanos Moschopoulos, BMO: “…With respect to the EXE and the overall IP product platform, is there any incremental color you can provide in terms of the types of customers you are seeing adopt that solution?”

Brian Campbell, Evertz: “…We are definitely seeing good interest and traction within our broadcast and new media customer set”

Rob Young, Canaccord Genuity: “…A lot of your competitors have been going through large M&A and are you seeing any beneficial environment for Evertz while some of these large competitors change their strategy?”

Brian Campbell, Evertz: “Yes we have picked up market share from our perspective.  We have very solid year-over-year growth and I don’t know that any of the competitors have had anything similar to that although some of them are no longer public entities where you can see the numbers. So I would say that yes we have definitely benefited and as a consequence perhaps of their activities but also directly resulting from the very significant, sustained investments we’ve made in new products and innovation.

Campbell concluded the call by emphasizing several points, “Our commitment to R&D continues to deliver innovative solutions enabling our customers to migrate to IP and IT based solutions to address the increasing complexities of our industry and to implement multiscreen TV everywhere anytime solutions.  Our customers have confidence in Evertz’s financial stability and our competitive position as one of the largest pure-players in the broadcast technology sector.”

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Related Content:

Press Release: Evertz Technologies Limited Revenue for the three months ended July 31, 2014

Evertz Revenue Declines 33 Percent in Q1 Fiscal 2014

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© Devoncroft partners 2009-2014. All Rights Reserved.

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EVS Q2 2014 Revenue Increases by 19.4 Percent, In Line with Expectations

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Sep 08 2014

Production and playout video server specialist EVS reported revenue of €35.6 million, an increase of 19.4% versus the same period last year, and an increase of 21.5% versus the previous quarter.  Excluding the effect of exchange rate movements and event rentals, the Company’s Q2 2014 revenue increased 9.0% versus the year earlier period.

Q2 2014 results were in-line with the Company’s expectations for the quarter.  Management cited strong performance in the Americas in Q2 2014 (compared to weak Q2 2013) and the company’s involvement in delivering the recent World Cup.  This more than offset a significant drop in revenue from the Asia Pacific region.

Net profit for the second quarter was €8.9m.  This represents a 28.0% growth versus the same period a year ago and an increase of 25.4% compared to the preceding quarter.

EBIT (Earnings before Interest and Tax) for the quarter was €12.9m, up 33.5% compared to the year earlier period and up 29.0% versus the first quarter of 2014.

 

Geographic Revenue:

  • Revenue from EMEA in the second quarter of 2014 was €17.7m, up 1.8% last year. Sales in EMEA accounted for 50% of group revenue.

 

  • Americas’ revenue for the second quarter of 2014 was €8.6m, up 170.8% versus last year. Americas accounted for 24.4% of group revenue, up significantly from 10.8% last year.

 

  • Q2 2014 revenue from the APAC region was €5.1m, down 41.4% versus last year. APAC accounted for 14.2% of total revenue in the quarter, down significantly from the contribution of 29.0% last year.

 

 

Segment Revenue:

  • Revenue from sports-related applications during the second quarter of 2014 was €23.2m, or 65.2% of total group sales, an increase of 20.8% versus last year.

 

  • Revenue from Entertainment, News & Media (ENM) during the quarter was €8.3m, or 23.2% of total group sales, down -17.8% compared to last year.

 

 

System & Service Revenue:

  • Systems revenue in the quarter was €33.4m, or 93.7% of total revenue, up 19.6% versus the same period last year

 

  • Services revenue was €2.2m, or 6.2% of total revenue, up 15.8% versus the year ago period.  Services revenue includes advices, installations, project management, training, maintenance, and distant support

 

 

Operating margin for the quarter was 36.2%, an improvement over both the 32.4% from last year and the 34.1% operating margin during the first quarter of the year.

Gross margins for the quarter were 75.0%, a slight decrease from the 76.3% gross margins during the Q2 2013 and flat versus the 74.9% gross margin level from last quarter.

Operating expenses grew by 6.8% versus the same period a year ago.  Management attributed the increase to additional hiring and incremental costs including investments in DYVI Live/SVS.

R&D expenses in the quarter were €6.2m, or 17.6% of revenue, up 11% from the same period last year, and down 0.5% versus last quarter.

Selling and administrative expenses in the quarter were €6.8m, or 19% of revenue, up 3.1% versus the same period a year ago, and up 25.6% versus the previous quarter.

The company ended the quarter with 503 employees, up from 497 at the end of last quarter, and up 5.4% from the 477 employees at the end of Q2 2013.

 

 

Order Book:
The order book stood at €40.9m as of August 27, 2014.  This compares to €35.4m on the same date one year ago.  All of the €40.9m order book will invoice during 2014.  This includes €7.7m for big event rentals for the 2014 World Cup and other smaller sporting events.  In addition, the Company has already secured €13m worth of orders for invoicing during 2015.

 

 

Outlook:

Based on signs of a moderate slowdown in the live production server market, EVS is now expecting low single digit revenue growth in 2014 versus 2013.  Management also indicated an expected 10-13% operating expense growth related to investments in new technologies.

“In the current challenging environment, we have been able to protect our market shares in our 4 target markets and deliver solid results in the second quarter.” said EVS CEO Joop Janssen. “At the upcoming IBC tradeshow in Amsterdam, we will launch new features and solutions, which will help us to consolidate our leading position in Sports and ENM. We are confident that our strategy is right and that our continued efforts will start paying off when the market situation improves.”

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Related Content:

Press Release: EVS Reports Second Quarter 2014 Results

EVS Q2 2014 Earnings Call Presentation

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Telestream Says Transcoding and Workflow Revenue Increased by 40 Percent Last Year

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 08 2014

Telestream said in a statement that revenue from its “flagship Vantage transcoding and workflow automation systems increased by more than 40 percent last year.”

The company also said that it has posted “profitable growth for the last 14 years.”

Company CEO Dan Castles attributed the company’s impressive track-record of growth to both innovation and management stability.

Privately held Telestream, which was acquired in 2011 by private equity firm Thoma Bravo, did not provide any other financial metrics such as overall revenue, gross margins, or profitability. Neither did it give an indication on the performance of its transcoding and workflow products in the current year.

However, the company did make some provocative statements about the market, competitive vendors, and broadcast industry M&A.

According to Telestream “market forces have driven recent corporate acquisitions, and some of these companies were struggling to survive. As a result, there are new combined companies, new management, and typically, new strategies. One of the likely victims during these transitions are customers who may have purchased products from one of these companies only to learn that a change of direction has resulted in product decisions that impact the original cost of ownership that was part of the initial purchase decision.”

“Based on our own experience of acquiring companies, we know that they have to be implemented carefully and strategically,” said Castles. “Owning a new piece of intellectual property does not mean that you understand the market it serves nor that it will integrate harmoniously within your existing product portfolio. We believe we are the right size as a company – not large and unwieldy, but not so small that we have to chase deals to remain in business. Our customers know we listen to their input as they see new products consistently coming to market that reflect their requirements. Implied in that equation is a level of trust that we will be around for years to come and that investing in products from Telestream is a smart decision long term.”

“Telestream offers its customers a very clear proposition,” said Castles. “We were one of the first companies to develop file-based workflow solutions as long ago as 1998 and today, our products reflect many hundreds of man years of development in this area. We are financially very solid and this has allowed us to stick to our strategies and not be tempted to chase opportunities that may bring in short term results, but distract us in the long term from executing on what we have committed to customers. We are very relevant to our customer base, and we take that role extremely seriously.”

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Related Content:

Press Release: Telestream Announces Strong Growth in File-based Workflow Enterprise Operations

More Broadcast Vendor M&A: Private Equity Firm Acquires Telestream

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Vislink Broadcast Revenue Declines 10 Percent in 1H 2014, Expects Improved Second Half

broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Sep 08 2014

UK-based Vislink plc, which owns broadcast industry brands Advent, Link, MRC Gigawave, and Pebble Beach, announced that its total revenue from continuing operations for the first six months of 2014 was £27.1m, down 3.2% versus the same period a year ago.

Pre-tax profit for 1H 2014 was £2m, up from a net profit of £1.4m during the same period a year ago.

 

Broadcast Performance:

The company’s broadcast industry revenue for the first half of 2014 was £21.1m, down 10.2% versus the first six months of 2013. Vislink attributed the lower year-on-year broadcast revenue to market uncertainty and longer decision making cycles.

Broadcast orders during 1H 2014 were £21.5m, down 22.9% versus the first six months of 2013.

The table below shows a complete breakdown of Vislink’s broadcast revenue by geographic region.

 

Vislink - Broadcast Revenus 1H 2014

 

Vislink’s 1H 2014 broadcast revenue includes a contribution from Pebble Beach Systems, which was acquired by Vislink in March 2014 for $24.7m.

In the 3.5 months since it was acquired, Pebble Beach contributed £3.1m, and generated an adjusted operating profit of £1.1m.  The company said that Pebble Beach “is developing very quickly and continues to trade ahead of our expectations at the time of acquisition.”

Following on from the success of the Pebble Beach deal, Vislink telegraphed to the market its intent to make more acquisitions in the future, saying its move to the AIM stock market “has simplified and reduced the financial burden of making acquisitions, giving us continued benefits for bolt-on acquisitions.”

“Whilst the broadcast market has been challenging for our hardware business, overall, we are encouraged with these results,” said Vislink Chairman John Hawkins. “We have taken timely action to reduce costs in our Hardware Division and we have seen an improved trading trend, the order book strengthened in Q2 and the orders to sales ratio is better than 1.

“We are delivering on our software strategy with Pebble Beach Systems performing ahead of expectations. The Group’s revenue has benefitted from the change in revenue balance, with software providing longer term visibility. The partnership with Harmonic Inc, which is being announced later today, represents further excellent opportunities for the Group.”

The company ended 1H 2014 with £7.7m of cash. There was a net cash inflow from operating activities in the period of £5.5m, up significantly from £1.6m for the first half of 2013.

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Harmonic Acquires 3.6 Percent of Vislink, Signs £2 Million OEM Deal

Separately, Vislink announced that Harmonic has acquired 3.6% of the company, through the purchase of 4 million new ordinary shared valued at £0.50 each. Vislink says it will use the investment from Harmonic to further strengthen its balance sheet.

In parallel with the investment, Harmonic has also signed £2m OEM contract with Vislink, through which Harmonic sell playout solutions from Pebble Beach Systems to broadcast industry customers. Vislink acquired Pebble Beach in March 2014 for $24.7m.

Under the terms of the OEM deal, Harmonic will place an initial order for software licenses of £2.0m, receivable in 2014, to secure Pebble Beach Systems’ products for onward sale in its integrated package.

Vislink says the deal with Harmonic “should contribute to improved profitability and penetration of Pebble Beach Systems software globally in the second half [of 2014].”

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Outlook:

Vislink said it has “an improved outlook for the broadcast market,” and anticipates improved trading in the second half of 2014.

For the past several years, Vislink has told the market its goal is to increase its revenue to £80 million, with 10% return on sales.

However, in its latest earnings announcement, the company has changed this position slightly, saying “As the proportion of our business coming from higher margin software becomes more significant, the target revenue needed to generate our long stated operating profit target will change. The Company remains committed to its target operating profit of £8.0m through both organic growth and bolt-on acquisitions.”

“2014 represents a transitional and transformational year for the Group and with the increasing focus on our software division, we believe that this will enhance the Group’s overall quality of earnings in 2014 and beyond,” said Hawkins.

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Related Content:

Press Release: Vislink plc half year results for the six months ended 30 June 2014

Harmonic Invests in Vislink, Signs £2 Million OEM Order for Pebble Beach Software

Broadcast Vendor M&A: Vislink Buys Pebble Beach for $24.7 Million

 

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Harmonic Invests in Vislink, Signs £2 Million OEM Order for Pebble Beach Software

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 08 2014

Playout and compression specialist Harmonic has acquired 3.6% of UK-based Vislink plc, through the purchase of 4 million new ordinary shares valued at £0.50 each.

Vislink says it will use the investment from Harmonic to further strengthen its balance sheet.

In parallel with the investment, Harmonic has also signed £2m OEM contract with Vislink, through which Harmonic sell playout solutions from Pebble Beach Systems to broadcast industry customers. Vislink acquired Pebble Beach in March 2014 for $24.7m.

Under the terms of the OEM deal, Harmonic will place an initial order for software licenses of £2.0m, receivable in 2014, to secure Pebble Beach Systems’ products for onward sale in its integrated package.

Vislink says the deal with Harmonic “should contribute to improved profitability and penetration of Pebble Beach Systems software globally in the second half [of 2014].”

“This agreement is another key strategic partnership for Vislink and reinforces our strategy of moving into software and providing customer centric, solution-led and best-in-class products which enable Vislink to successfully capture new expanded markets,” said Vislink Executive Chairman John Hawkins. “This agreement will also provide significant new channels to market for our software solutions. We are delighted to welcome Harmonic as a partner and shareholder.”

“We are pleased to seal this strategic partnership with Vislink and become aligned with their interests as a shareholder,” said Harmonic SVP Peter Alexander. “We are both innovation leaders in video, and see significant synergy across our customer base and product lines. Together we can grow market share and broaden our addressable markets globally.”

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Related Content:

Press Release: Pebble Beach Systems To Partner With Harmonic Inc

Broadcast Vendor M&A: Vislink Buys Pebble Beach for $24.7 Million

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Autodesk Media & Entertainment Revenue Flat in Q2 FY 2015

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 19 2014

Autodesk reported that its Q2 FY 2015 revenue from its Media and Entertainment (M&E) segment was $44m, flat versus the same period a year ago, and up 15.8% compared to the previous quarter.

Revenue from animation products decreased 2% versus the same period a year ago, while sales of creative finishing products increased 7% compared to the second quarter last year.

The company said that its results “reflect general changes in the M&E industry end-market demand environment, the planned inclusion of our M&E products in other Autodesk industry suites, and the business model transition as customers are opting for desktop subscription.”

M&E gross margins for the second quarter of fiscal 2015 were $34m (72.7%), down from 79% for the same period a year ago, and down from 76.3% in the previous quarter.

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Related Content:

Press Release: Autodesk Reports Record Revenue Results in Q2 FY 2015

Previous Year: Autodesk Media & Entertainment Revenue Declines 11 Percent in Q2 FY 2014

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Aug 19 2014

The Vitec Group, which owns more than a dozen brands in the broadcast industry said that it has decided to exit its Integrated Microwave Technologies (IMT) business unit, which provides wireless microwave products.

The announcement was made in an investor presentation that accompanied Vitec’s earnings announcement for the first half of 2014.

However, company executives stressed that, until a transaction occurs, it will continue to manufacture, sell, support, and honor the warranty of all IMT products provided to its broadcast customers.

Vitec’s IMT business includes three brands: Nucomm, RF Central, and Microwave Services Company.

Vitec IMT Brands - Nucomm, RF Central, Microwave Svs Co

Vitec’s IMT business posted a loss of £1.1m during the first half of 2014, compared to a profit of £1.4m for the same period a year ago.  IMT’s 1H 2014 revenue was £5.8m, down 35% versus the same period last year.

For the full year 2013, IMT broke even on revenue of £14m, which included a large profitable contract from the US Department of Justice, worth approximately £3.4m.

The company says that the disposal for IMT will allow it to focus its Videocom business on its core broadcast activities.

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Vitec acquired Nucomm and RF Central in a transaction valued at up to $73m in June 2007.

At that time, Vitec said the deal would immediately enhance its earnings, and that “the acquisition is an excellent fit with Vitec’s Broadcast Systems division. The acquired companies sell to similar customers and Vitec’s infrastructure is expected to provide opportunities for further growth internationally.”

The purchase of Nucomm and RF Central coincided with the start of a huge wave of spending related to the 2.4 Ghz Broadcast Auxiliary Service (BAS) Relocation Project, whereby wireless operator Sprint, in response to a 2004 FCC decision, implemented a program to resolve ongoing interference between public safety and commercial operations in the 800MHz band.

By the time of the project’s official completion in 2010, Sprint had spent about $750 million and broadcasters had moved their ENG and other contribution applications to new compressed digital channels between 2025MHz and 2110MHz.  Sprint said more than 1,000 engineers were employed during the project and that as many as 100,000 pieces of microwave and ENG equipment were installed.

The strategy paid off almost immediately for Vitec, which said the following in its full year results for 2007:  “RF Systems is performing well, with sales and operating profit in the seven months of Vitec ownership of £23.5 million and £3.3 million respectively. Pro-forma 12-month sales and operating profit for 2007 were £32.2 million and £5.2 million. Both RF Central and Nucomm, have launched well-received ‘High Definition’ products that will maintain our competitive position. 2008 and 2009 results will be buoyed by revenue from the BAS relocation project, which is expected to fall away by 2010.”

Today however, Vitec says that its IMT business is now “relatively small part of our business, which provides wireless microwave products for the Military, Aerospace and Government (MAG) markets.”

Vitec explained the rationale for the decision to exit IMT saying: “We have attempted to grow IMT in an increasingly challenging market that has become overly price driven. This was recently demonstrated by the award of certain large government contracts to competitors at prices where we would not generate positive returns. There are limited synergies between IMT’s MAG business and other activities within the Group.

“As a result, we have decided to exit the IMT business and we are accessing our options of a sale or closure. Our preliminary assessment of the net exit costs based on closing the business is an exceptional one-off pre-tax charge in the region of c.£5.5 million, after foreign exchange recycling, of which c.£5.0 million is anticipated to be a cash outflow. We will provide an update on the exit from IMT in due course.”

In addition to anticipated fall-off in business following the completion of the BAS relocation project, another likely catalyst for Vitec’s decision to sell the IMT business is the strong performance by Teradek, which Vitec acquired in August 2013 for up to $15m.

The chart below, from Vitec’s 1H 2014 earnings call with equity analysts describes the declining sales at IMT and strong growth by Teradek, and announces the company’s intent to divest IMT in order to focus on its core broadcast activities.

 

Vitec 1H 2014 with IMT & Teradek outlined

 

According to Vitec’s most recent earnings announcement, “the Teradek business that we acquired in H2 2013 is performing well with strong growth post-acquisition. The business continues to develop innovative products, including the new Bolt wireless transmitter that was released in July 2014 and further product launches are planned for later in the year.”

Based on the success of Teradek during the period, Vitec made a $3.2m “earnout” payment to Teradek’s former shareholders in March 2014. This consisted of $2.4m in cash, and 72,933 new Vitec ordinary shares worth a further $800,000.

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Related Content:

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million

Press Release (2007): The Vitec Group Plc Acquisitions of Nucomm and RF Central

Vitec Group 2007 Full Year Results: A Year of Strong Growth

Vitec Group Presentation (2007): “RF Systems ‘Consolidate and Grow” announcing purchase of Nucomm and RF Central

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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