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OpenTV Grows Revenues in Advance of Kudelski Deal

Interactive TV software vendor OpenTV posted improved revenues for the third quarter 2006, just weeks after announcing a deal with conditional access supplier Kudelski Group under which Kudelski will acquire control of OpenTV to create a one-stop shop for set-top software technology.

OpenTV's revenues for the quarter ended September 30, 2006 were $26.6 million, a 36% bump over revenues of $19.5 million in third quarter 1005, as royalties and licenses revenues increased 41% to $17.4 million. Services and other revenues increased 28% to $9.2 million.

However, OpenTV still posted a net loss for the quarter of $1.8 million, or $0.01 per share, compared to a net loss of $4.1 million, or $0.03 per share, for the third quarter of 2005. The San Francisco-based firm noted that the loss for the recent quarter included approximately $0.8 million, or $0.01 per share, in share-based compensation expenses which the company began reporting in 2006 under new accounting rules.

As of September 30, 2006, OpenTV had $24.3 million in deferred revenue compared with $22.6 million at the end of 2005, and cash, cash equivalents and short and long-term marketable debt securities totaling $67.7 million compared to $64.5 million as of December 31, 2005.

On October 18, 2006, Switzerland-based Kudelski signed a stock purchase agreement with Liberty Media Corporation to acquire voting control of OpenTV for $132.3 million, buying 26.7% of the company's economic interest and 74.7% of the voting interest of OpenTV’s ordinary shares outstanding at the end of Q3. As part of the transaction, Liberty is expected to eventually pay OpenTV up to $19.7 million based on an existing agreement between Liberty and OpenTV. The transaction is expected to close by the end of first quarter 2007.

"Our strong third quarter revenue growth illustrates the increasing global demand for our product portfolio, and our position at the center of the digital television evolution," said OpenTV Chairman and CEO Jim Chiddix in a statement. "That performance in our core business also enables us to invest in a more targeted and disciplined manner in a host of areas, including advanced advertising solutions, participation TV, mobile video, digital terrestrial, and other markets where longer term growth opportunities remain very appealing."