MGI Software Says It Is Poised To Lead Digital-Imaging Industry
By Deborah Gardner, Staff Reporter
08/04/1999
Dow Jones Business News
(Copyright (c) 1999, Dow Jones & Company, Inc.)
TORONTO -(Dow Jones)- After completing an acquisition and a partnership agreement in recent months, MGI Software Corp. "absolutely" has an edge in the digital-imaging industry, Anthony DeCristofaro, president and chief executive, told Dow Jones.
DeCristofaro said no other company in the industry is positioned to take advantage of both the Internet and the mass consumer markets. MGI is now the only company which can supply all types of digital-imaging technologies, including desktop applications and imaging solutions, he said. "Other competitors are going to have to restructure to win."
Digital imaging involves the storage of images on computers. The field includes digital photography, scanning and compositions and manipulation of bit-mapped graphics. The technology allows for basic alterations of pictures, such as eliminating "red eye" or restoring old and faded photographs. On the Internet, digital imaging allows the user to zoom in or to view different angles of a high resolution photograph.
On July 1, MGI announced the acquisition of some assets of Live Pictures Inc., a private U.S. software company, for $8.6 million in cash and shares. Live Pictures' key focus is in imaging and the Internet. The cornerstone of this acquisition is Live Pictures' high profile electronic-commerce customers, such as CNN Sports, Minolta Co. Ltd. and Bloomingdales, DeCristofaro said.
In late June, MGI announced a strategic partnership with Zoran Corp. (ZRAN), involving the payment by MGI of cash, common shares and future royalties. In exchange, MGI received intellectual property related to Soft DVD , Zoran's DVD software decoder for personal computers and related software development and support resources.
"The acquisition of Live Pictures and Zoran is part of a global expansion plan of ours to sell our technology around the world." Josef Zankowicz, director of corporate communciations, said.
MGI, which supplies photography software mostly to individuals, conducts about 65% of its business in North America. However, it has a strong world-wide distribution base.
DeCristofaro believes the company, which plans to apply for a Nasdaq stock listing this fall, can now become the industry standard for digital imaging on e-commerce sites. "The whole world is moving really fast over to digital," he said. "That's why MGI's formula for what we have as a company is so well positioned to take advantage of that growth."
The Richmond Hill, Ont.-based company likely will be making several partnership announcements related to the e-commerce side of the business before the end of the year, DeCristofaro said. "There's a lot more customers coming our way," he said. He declined to elaborate.
As well, the company will be rolling out at least one new product a month this fall, and will release major upgrades of its flagship PhotoSuite and VideoWave software.
"We expect it to be the most aggressive product-roll-out year ever for the company," Zankowicz said, noting that some of the products are ones Live Pictures had in the pipeline before the acquisition.
The new products will be specifically focused toward the digital imaging category, he said. Already, MGI has begun installing the first beta version of its photo-network stations, a Live Pictures product.
DeCristofaro said the company plans to expand its product line in fiscal 2001, noting there will be much more activity in the e-commerce solutions side of the business. He declined to elaborate.
Zankowicz said MGI invests heavily in research and development every year and will continue to do so in order to take advantage of the e-commerce market.
In the fiscal year ended Jan. 31, 1999, the company posted a net loss of 8.5 million Canadian dollars (US$5.7 million) or 35 Canadian cents a share, compared with a loss of C$7 million or 35 Canadian cents a year earlier. In fiscal 1999, Zankowicz said about 25 Canadian cents a share was spent on research and development. Revenues were up 20% to C$16 million from C$13.3 million.
Daniel Kim, a technology analyst at Octagon Capital Canada Corp., said he hasn't revised his revenue projections for fiscal 2000 since the acquisition and partnership pact were announced, but C$28 million to C$30 million "seems reasonable."
DeCristofaro said he is "comfortable" with that outlook. "We're setting the stage for a strong year next year," he said.
However, he noted that the company won't be profitable in fiscal 2000, as originally projected. Instead, MGI should start posting profits in the second quarter of fiscal 2001.
"A lot of what you're seeing in this company is more about the future than it is about today," Zankowicz said.
- Deborah Gardner; 416-306-2100
Copyright (c) 1999 Dow Jones & Company, Inc.
All Rights Reserved.
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