Contact: Scott Denne
The aptly named SeaChange International is struggling through a dramatic transition of its own market. The maker of back-end and front-end software for television service providers is at the tail end of transforming its products to remain relevant in the increasingly multiscreen and mobile world of TV viewing. It’s been guarded in the past about its prospects as an acquirer, saying it might explore tuck-ins. In its most recent earnings call, however, the company’s new CEO struck an aggressive note, saying it planned to pursue acquisitions and canceling its previous announced share buyback plan.
SeaChange has spent the past few years ridding itself of hardware products and watching revenue from its legacy software decline steadily and at a rate that’s well above the growth of its new lineup of software. It has offerings that manage the back-end delivery systems of cable providers and a front-end gateway for serving video through set-top boxes and, now, mobile devices. Last quarter, SeaChange’s revenue dropped 18% year over year to $30m and its guidance disappointed Wall Street, something it has done consistently as its stock has dropped by more than half over the past year.
The company plans to grow revenue by becoming an end-to-end supplier of software needed to transition cable operators and content providers into the emerging world of over-the-top video, mobile and video on demand (VoD). Some areas where it may find acquisition targets include content discovery software – mirroring recent purchases by Rovi (Fanhattan) and TiVo (Digitalsmiths) – and advertising, as it currently partners with both BlackArrow, a VoD advertising specialist, and INVIDI, a networking firm that enables targeted advertising in linear TV and is already embedded at many of the largest US service providers.
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