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Chyron Takes 2009 Revenue Hit

Graphics vendor Chyron reported a slight bump in fourth quarter 2009 revenues but saw overall revenues drop 25% for the year as broadcasters curtailed spending in a tough economy.

Chyron recorded revenues of $7.2 million for the quarter ending Dec. 31, 2009, up 7% over the prior year's fourth quarter and up 13% over the third quarter of 2009. But revenues of $25.6 million for fiscal year 2009 represented a 25% drop from 2008 revenues of $34.3 million.

Operating expenses of $5.0 million for the fourth quarter were down 3% compared to 2008, and operating expenses of $21.1 million for the fiscal year were down 7% from fiscal 2008.

Chyron suffered a net loss of $0.3 million for the fourth quarter of 2009, compared to a net loss of $0.2 million for the fourth quarter of 2008. Net loss for fiscal 2009 was $3.1 million after a $0.5 million net income tax benefit, as compared to 2008 net income of $17.8 million after a $16.6 million net income tax benefit.

Over the past two years, Chyron has been remaking itself from a company that primarily sold hardware-based graphics products to a software-as-a-service (SaaS) provider, driven largely by its Axis online graphics system. Chyron believes that selling cloud-based graphics products like Axis, where finished graphics are delivered through the Internet to desktop users, is a better business model going forward as stations adopt a more IT-based approach to operations. The Axis system also creates recurring revenues instead of one-time hardware sales.

Chyron's 2009 results seem to support that thinking. While service revenues including Axis only represented 19% of overall 2009 revenues, at $4.8 million, they were up 30% from $3.7 million for 2008, when services only accounted for 10% of overall revenues. By comparison, product revenues of $20.8 million for fiscal 2009 were down 32% as compared to $30.6 million in 2008, as broadcasters held back on large capital investments.

"In my opinion, the U.S. economy has entered the lean years, in which growth will be hard to achieve, particularly by companies that resist change," said Chyron President and CEO Michael Wellesley-Wesley on the Q4 earnings call.

Wellesley-Wesley said that Axis is currently used by some 200 TV stations and reaches 5,000 desktops. After signing up Sinclair and Post-Newsweek as new customers in 2009, Chyron expects to announce several "enterprise-level" customers in 2010, he added. He hinted that Chyron will also introduce a cloud-based editing application at NAB to address the editing market, which represents a larger opportunity than graphics.