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w/e March 17, 2010 SCRI International, Inc © 1984 - 2009


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Global 3-D TV Shipments Set to Soar to 78 Million Units in 2015

Global 3-D television shipments will soar to 78 million units by 2015, rising at a Compound Annual Growth Rate (CAGR) of 80 percent from 4.2 million in 2010, iSuppli Corp. predicts. Revenue from shipments of these sets will boom to $64.4 billion in 2015, up by nearly a factor of nine from $7.4 billion in 2010.

“While 3-D television has been all the rage in the consumer electronics industry, the market so far has been more talk than action,” said Riddhi Patel, director of television system research at iSuppli. “However, announcements made before and after the 2010 Consumer Electronics Show (CES) in January indicate that 3-D TV is becoming a reality. At the event, top television brands including Sony, LG Electronics, Panasonic and Samsung showcased upcoming offerings of full-featured 3-D TVs in the home. Furthermore, consumer electronics makers at CES announced 3-D Blu-ray players and home theater systems, providing critical support that will help 3-D to move beyond a niche market and enter the mainstream in the coming years.”

Because of this strong brand commitment, competition in the 3-D market is expected to be intense, causing prices to plunge. The global Average Selling Price (ASP) for 3-D TVs is set to drop to $825 by 2015, less than half the $1,768 ASP in 2010. This will make 3-D TVs attractive to worldwide consumers.

iSuppli’s forecast assumes that brands will roll out their initial 3-D televisions starting in the first quarter and continue through the second half of the year. Many of the initial 3-D TV sets, designed to test the waters of the market and gauge consumer interest, will command a price premium of $600 to $700 compared to 2D LCD-TVs using Light Emitting Diode (LED) backlighting.

iSuppli predicts that early adopters alone will purchase 3-D TVs in 2010 and 2011. However, by 2012 and beyond, sales will spread to a wider audience as content availability increases and prices drop—factors that will enable 3-D TVs to appeal to a wider audience.

Content is starting to become available this year from ESPN, DIRECTV, BSkyB, SkyLife and other broadcasters and providers. ESPN, for example, will be broadcasting 85 games in 3-D this year. Moreover 40 to 50 gaming titles in 3-D are expected to be issued in 2010.

One concern for the television industry is that special glasses are required for consumers to actually see 3-D images.

These glasses raise a number of questions. Will eyewear be compatible with other sets, either from the same or from different brands? Do consumers want to wear the glasses for extended periods—or will extended wearing be uncomfortable? And beyond the price of the 3-D set, how much will the glasses cost? Some quarters surmise that the glasses could be as much as $300 a pair—which would prove prohibitive for an average family to afford.

One way that some OEMs are working around this issue is by including two pairs of glasses with their 3-D sets. These bundles would then take away the price of the glasses and give consumers the capability to view 3-D immediately.

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Global Broadcast and Media Sales Turnover Declines

IABM, the industry association that represents broadcast and media technology suppliers worldwide, announced the publication of its latest Industry Index which tracks the financial performance of supplier companies in the sector.

Global sales turnover by those supplying technology to broadcast and media companies has declined by 7.2% for the last 12 months as compared to the prior 12 months. There are indicators, however, that during the last quarter of 2009, the decline was halted.

Almost half the companies (47%) in our sample are loss making in this latest 12 month period, with some 29% of organisations moving from profit into loss.

Overall profitability has fallen by 12.5%, but the global profit to sales return remains at around 11%, reflecting again the structural changes that have taken place within organisations in order to maintain satisfactory shareholder returns.

IABM Director General, Peter White, said “Although the worst appears to be over and a degree of optimism is discernible, 2010 is still shaping up to be a fairly lack lustre year. As we exit the year, however, we do expect to see better signs of market improvement with a more promising 2011 and 2012.”

The first three quarters of 2009 were very difficult for the industry but signs appear more positive at the end of the year. European based companies appear to be recovering faster than their North American counterparts.

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Optibase Sells Video Business to a Subsidiary of VITEC Multimedia

Optibase Ltd. announced that it has entered into an asset purchase agreement with Optibase Technologies Ltd., a wholly owned subsidiary of VITEC Multimedia pursuant to which Optibase Ltd. and its subsidiary Optibase Inc. will sell their entire video business to Vitec.

Under the terms of the transaction, which was approved by the Board of Directors of both companies, in consideration for the sale of the Business, Vitec will pay the Company an aggregate amount of US $8 million in cash of which US $1 million will be deposited in escrow for a 2-year period as a security, inter alia, for breach or material inaccuracy relating to Optibase's representations and warranties. In addition, Optibase and Vitec agreed on an earn-out mechanism pursuant to which 45% of Vitec's revenues deriving from the Business exceeding $14 million in the year following the closing of the Transaction will be paid to Optibase.

VITEC specializes in the development and industrialization of Advanced Digital Video solutions in the MPEG field for OEM and Integrators. Since 1988, VITEC Multimedia has been devoted to the development of MPEG Encoding and Decoding Solutions and the creation of innovative concepts intended for the digital video applications and since 1990 has focused its entire efforts on digital video, conforming to ISO standards (MPEG for video) and others.

Chyron '09 Revenue Down 25%

Chyron announced its financial results for the fourth quarter and year ended December 31, 2009. Revenues of $7.2 million for the fourth quarter of 2009, up 7% over the prior year's fourth quarter and up 13% over the third quarter of 2009; revenues of $25.6 million for fiscal year 2009, down 25% from the prior year; Net Loss of $0.3 million for the fourth quarter of 2009, as compared to a net loss of $0.2 million for the prior year's fourth quarter; net loss of $3.1 million for fiscal 2009, as compared to net income of $17.8 million for fiscal 2008 after a net tax benefit of $16.6 million;

Michael Wellesley-Wesley, Chyron President and CEO, commented, "2009 was the year when, thanks to the talent, dedication and hard work of my colleagues, we started building the foundation for future growth and pushed forward with reinventing our core business from products to services. During the tough times in 2009, we understood that revenues for the full year would be lower and we also understood that we had an opportunity to build a stronger business – and we believe we did. We increased our investment in R&D by 13% for the year and focused our activities on building Axis, our web-services solution based upon the Cloud Computing model.

"Our focus on the Cloud helped to keep revenue from even steeper erosion during the recession of 2009; overall revenue fell 25% as product sales fell 32% but our services revenue rose 30% from $3.7 million to $4.8 million. We believe that this is key because we are working to reinvent our core business by transitioning from a products company to a services company, specifically to a Cloud Services company. Driving this transition forward was a crucial aim for 2009, and a goal that I am happy to say we believe is moving forward successfully. In 2009, services accounted for 19% of total revenue, whereas in 2008 services revenue accounted for 11% of total revenue.

"Another key goal for 2009 was to preserve cash. We began the year with $5.3 million in cash and we ended it with $5.2 million in cash. We achieved this through tight cost control, reductions in force, pay cuts and disciplined cash management. Today we believe that we have a strong balance sheet, adequate working capital and the ability to generate sufficient cash from operations to fund our current growth strategy."

"Revenues began to recover in the late summer and for the fourth quarter we were able to show positive year over year comparisons. Our business continues to improve in the first few months of 2010, so I feel increasingly confident that the worst media recession in the past 50 years may now be behind us."

"We believe that we now find ourselves in a stronger position to benefit from any economic recovery. We are optimistic that what we have begun building in 2009 can provide the Company with a sustainable competitive advantage and help position Chyron to be better able to seize market share in future years."

SeaChange Q4 Break Even

SeaChange International, Inc. a l provider of software and hardware solutions for video-on-demand (VOD) television, announced financial results for its fiscal 2010 fourth quarter and full year ended January 31, 2010. Total revenues for the fourth quarter under generally accepted accounting principles (GAAP) were $53.0 million, which was $1.0 million lower than revenues of $54.0 million for the fourth quarter of fiscal 2009. Total non-GAAP revenues for the fourth quarter of $54.1 million were $0.1 million higher than revenues for last year’s fourth quarter. The Company had GAAP break-even results for the fourth quarter compared with net income of $4.8 million or $0.15 per diluted share for the previous year’s fourth quarter. Non-GAAP net income for this year’s fourth quarter was $2.3 million or $0.07 per share compared to non-GAAP net income of $5.8 million or $0.19 per share for the fourth quarter of last year.

Total revenues for all of fiscal 2010, ended January 31, 2010, were $201.7 million, which was $0.1 million lower than total revenues of $201.8 million for the prior fiscal year. GAAP net income for fiscal 2010 was $1.3 million or $0.04 per share, compared with GAAP net income of $10.0 million or $0.32 per share for fiscal 2009. Non-GAAP net income for fiscal 2010 was $8.0 million or $0.25 per share compared with non-GAAP net income of $13.9 million or $0.44 per share for fiscal 2009.

The Company ended the fourth quarter of fiscal 2010 with cash, cash equivalents and marketable securities of $48.5 million and no debt compared to $53.4 million and no debt at the end of the third quarter of fiscal 2010. An increase in accounts receivable caused by the timing of several large orders at the end of the fourth quarter along with $1.6 million of capital expenditures was partially offset by $3.8 million of non-cash depreciation, amortization and stock compensation expense.

Total revenues from the Company’s Software segment in the fourth quarter of fiscal 2010 were $34.9 million, which were $2.9 million or 9% higher than Software segment revenue of $32.0 million generated in last year’s fourth quarter. The increase in Software segment revenues between years was due primarily to increased VOD software subscription revenues from Comcast and Cox and the inclusion of revenue in this year’s fourth quarter from the recently acquired eventIS. Partially offsetting these revenue increases was lower Advertising and Broadcast software revenue due to the impact of the challenging advertising market affecting capital spending for these product areas.

The Servers and Storage segment generated revenue of $12.3 million in the fourth quarter of fiscal 2010 which was $5.4 million lower than revenues of $17.7 million for the fourth quarter of fiscal 2009. The decrease in Servers and Storage revenue from an unusually strong fourth quarter of last year was due to lower VOD server shipments to smaller North American cable television customers. In addition, the segment’s year over year revenue decline was due to lower Broadcast server revenue resulting from the soft advertising market as noted.

The Media Services segment revenues of $5.8 million for the fourth quarter were $1.6 million or 38% higher than comparable revenue for the fourth quarter of fiscal 2009. The year over year increase in revenues was due primarily to increased VOD content processing fees from customers in Greece and Turkey combined with recent contract awards from customers in France and Dubai.

Commenting on guidance, Bill Styslinger, SeaChange CEO & Chairman, noted, “We are currently tracking to the revenue guidance we provided in December for fiscal year 2011 revenues of $225 - $235 million. Relative to the first quarter, we expect industry seasonality to impact our financial performance. With that in mind, we are targeting fiscal 2011 first quarter revenue to be in the range of $52 - $54 million. This top line guidance is based on continued strength in VOD software deployments at key U.S. cable television providers and the addition of eventIS and VividLogic software revenue. We are targeting GAAP break-even results for the first quarter and non-GAAP EPS in the range of $0.06 - $0.08 per share. The GAAP and non-GAAP earnings guidance for the first quarter excludes estimated severance charges of $1.5 to $1.8 million related to first quarter headcount reductions for which the Company has notified effected personnel. In addition, we are expecting second half fiscal 2011 revenues to be higher than first half revenues based on stronger VOD software deployments worldwide.”

The Company also announced the departure of Ed Dunbar, who had held the role of President and COO. Yvette Kanouff has been promoted to President, where she will be responsible for the Company’s business development, overall product strategy, product management, communications and investor relations. Additionally, Erwin van Dommelen has been promoted to President of SeaChange Software, where he will be responsible for the Software business including growth, profit, engineering, product roadmaps and direction, and the general management of the business unit.

Wegener Reports Cuts Losses

Wegener Corp. posted a preliminary loss of 4 cents a share for the quarter ending Feb. 26, 2010--half that of the previous quarter.

Fiscal 2Q10 revenues were $2.4 million; net loss was around $533,000, yielding 4 cents a share. The F1Q10 loss totaled $900,000, or 8 cents a share on revenues of $1.9 million. Revenues in the year-ago period were $4.5 million, with net earnings of $8,000 or less than a penny a share.

Wegener’s 18-month backlog was $4.5 million as of Feb. 26, 2010, compared to $5.9 million a year earlier. The total multi-year backlog was approximately $6.2 million compared to $9.7 million last year. Bookings were around $2.1 million compared to $1.8 million a year earlier.

“Our performance in the second quarter was certainly an improvement over the first quarter of fiscal 2010, but I am far from satisfied with our operating results,” stated Troy Woodbury, president and CEO of Wegener. “As we strive for improvements in revenue and earnings, we continue to focus our attention in four key areas: booking new orders, lowering our breakeven point, conserving cash, and improving our internal operating processes.”

Wegener booked a $2 million multi-year order with an international customer during the first week of its current fiscal third quarter. Final F2Q10 results will be released April 12.

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