Replay/Echostar (OT -- SNDK??!!)
news.cnet.com
Start-up hopes to replay TiVo's IPO success
By Jim Davis
Staff Writer, CNET News.com
January 26, 2000, 5:45 p.m. PT
Replay Networks, which is competing against TiVo in the digital video recording
device market, hopes to raise as much as $150 million through an initial public
offering.
Replay, in its filing with the Securities and Exchange Commission, said the funds raised
would go to activities such as advertising its products, new product and service
development, and subsidizing the cost of its products. The company did not yet disclose
how many shares it plans to sell or the projected price range.
Replay Networks offers "personal video systems," also
known as digital video recorders (DVR), and a
complementary service that allows television viewers to
pause and rewind live television by recording video streams
to the device's hard drive. The company's service also
allows viewers to customize television schedules and
specialized content.
Replay faces potential competition not only from TiVo, but
from Microsoft and its WebTV business. WebTV has added
DVR functions to its set-tops that are being developed in
conjunction with Echostar. Other companies are doing the
same.
To battle in the marketplace, Replay has so far signed
Panasonic to manufacture and develop new DVR devices, and Sharp Electronics has
signed a non-binding letter of intent to make the devices as well.
Interestingly, Echostar is said in the firm's filings to have signed a non-binding letter of
intent to incorporate the Replay service into its satellite receiver products, which would
appear to be a blow to WebTV, which is already providing such services. This relationship
had not previously been disclosed.
Echostar, along with Sharp, has also taken an equity stake in Replay.
News of the offering comes as International Data Corp. projects the market for DVR
devices will grow to about 10 million units in 2004. That leaves plenty of room for growth for
both Replay and TiVo. Replay said in its filing it has sold about 6,000 DVRs to date, and
TiVo said in its earnings report earlier this week that it sold 26,000 receivers during its
fourth fiscal quarter.
The offering is being handheld by Morgan Stanley Dean Witter; Bear, Stearns & Co; Chase
H&Q; Deutsche Banc Alex Brown; and Wasserstein Perella Securities.
Replay disclosed that it has not yet recognized any operating revenues since the
company's incorporation in 1997, and that "we have incurred significant losses and have
had substantial negative cash flow, and we may never achieve profitability," it warned. As
of Sept. 30, 1999, the company had an accumulated deficit of $23.6 million, it said in the
filing.
Numbers like that didn't scare investors away from TiVo's initial public offering, though.
TiVo set a target price for its IPO of $11 to $13 per share, and eventually sold 5.5 million
shares in Sept. 1999 at $16 a piece, raising $88 million. Shares have traded as high as 78
since then, although the stock dropped about 6 percent today to close at $38.50.
Among other potential competitive issues the company listed in its filing, Replay noted that
a division of Gemstar had filed suit against TiVo over use of electronic program guide data,
and that a similar lawsuit against Replay could not be ruled out. |
