OPTV: JOINT VENTURE WITH MOTOROLA
(Thank you goes to Whitephosphorous off Ragingbull.com for posting this.)
OPTV: JOINT VENTURE WITH MOTOROLA
Prudential Volpe Technology Group November 14, 2000
Subject: OpenTV Corp. (OPTV-27)--NASDAQ
OPINION
==========
Current: STRONG BUY
Analysts: Randy Scherago (415) 274-4428
J.P. Sulpizio (415) 274-4473 RISK: HIGH
12-Month Target Price: $35
Ind. Div.: NA Yield: NA Shares: 60.0 mil. 52-Wk.Range: 245 3/4-20 1/2
EPS FY Year P/E 1Q 2Q 3Q 4Q
Actual 12/99 $(0.32) NM $(0.03) $(0.03) $(0.08) $(0.10)
Current 12/00 $(0.24)E NM $(0.05)A $(0.07)A $(0.06)A $(0.06)E
Current 12/01 $(0.10)E NM $(0.04)E $(0.03)E $(0.03)E $ 0.00E
OpenTV announced on November 14, that it is forming a joint venture with
Motorola to provide services to cable and satellite network operators for the
integration and testing of interactive television applications. The new venture
should employ approximately 30 to 40 OpenTV engineers and begin offering
services in the first quarter of 2001. We believe that Motorola has a backlog
of integration projects for the certification of interactive TV applications
using Motorola's set-top boxes that should be allocated to this joint venture.
OpenTV also sold its 90% equity interest in the Acadia Application Integration
Center to Motorola. Acadia assists third-party application developers in
certifying their interactive TV applications for use on Motorola set-top boxes.
We believe the transaction is valued at approximately $5 million and will close
in January of 2001. Acadia employs approximately 30 engineers, and we believe
the sale will nominally decrease OpenTV's service revenues in the first quarter
of 2001.
In a separate transaction, OpenTV acquired CableSoft Corporation, a developer of
software applications that provide local content interactive services, such as
yellow pages and classified ads, for the cable and satellite television network
operators. We believe a primary benefit of CableSoft's technology is its
ability to run on analog set-top boxes. OpenTV exchanged 1,556,324 shares of
its common stock or approximately $34 million based on yesterday's closing price
of 21 7/8. CableSoft currently has a cash burn rate of approximately $200,000
per month, and we anticipate that CableSoft operations should show operating
profitability by the third quarter of 2001. Motorola previously owned 40% of
CableSoft.
We believe OpenTV's burgeoning relationship with Motorola gives the Company a
boost in the U.S. cable market where the Motorola DCT-2000 set-top box is in use
in more than seven million homes and could be deployed in 11 million homes by
December of 2000. OpenTV has ported its middleware to the low-end DCT-2000
set-top box and will work with Motorola to port its middleware to the
next-generation DCT-5000+ set-top box and the DVi-4000, an advanced set-top box
targeted for the European market. Motorola is also licensing OpenTV's Device
Mosaic Web browser for use on digital set-top boxes. Motorola currently owns
approximately 5.4% of OpenTV, following its recent purchase of 1.9 million
shares from News Corporation on September 18, 2000.
We reiterate our STRONG BUY rating and $35 price target on OPTV. |
