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Fool Plate Special: Liberate Freeing Up Interactive TV
By Rick Aristotle Munarriz
For most families, the television has become the ultimate appliance. As a prime-time magnet and a source of everything from news reports to late-night infomercials, it is clearly the hub of the modern home. But the powerful entertainment device remains limited, in that the degree of viewer interaction begins and ends with the remote control -- but it doesn't have to, and won't, always be that way.
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Liberate Technologies (Nasdaq: LBRT - news) continues to toil away in creating software that allows for enhanced Web-based interaction with your television set. Working with cable, satellite, and telecommunications network operators, Liberate is well-greased to compete with the mighty Microsoft (Nasdaq: MSFT - news). With former Sybase (NYSE: SY - news) chief Mitchell Kertzman at the helm and a line of top-notch investors including AOL Time Warner (NYSE: AOL - news) and Oracle (Nasdaq: ORCL - news), Liberate is ripe with cash and ambitious technology.
Liberate is the software heart of AOLTV -- it aims to supplement TV taken through an ordinary signal with email, instant messaging, chat, and an interactive program guide -- but its clients also include the likes of AT&T (NYSE: T - news), Cox Communications (NYSE: COX - news), and Comcast (Nasdaq: CMCSA - news).
Promising companies like ACTV (Nasdaq: IATV - news) have been able to provide interactive viewing where enabled programming lets the user pick different camera angles and information, but it's never reached the critical mass to make it viable. With over 1.5 million deployments, Liberate is making headway into shattering the notion that the television set will always be a one-way source of infotainment.
Yes, WebTV has been a flop long before Microsoft took it under its wing, but it continues to underdeliver because it is little more than an Internet browser borrowing your television set as a living-room monitor. Microsoft, like Liberate, is aiming far higher than that.
T-commerce? That's where Liberate software allows for commercial watchers to click for more information -- even closing the sale on a purchase. Instant messaging while watching the Super Bowl? Sure. These and many more second-generation digital services are what will transform Interactive Television from a premium novelty to an immersive necessity.
That future is still not here. Liberate reported another loss last night. However, the pro forma loss of $0.12 a share was a penny better than expected. For the new fiscal year, Liberate is looking at revenues between $77 million and $80 million -- for revenue growth of nearly 55%. Pro forma losses should be in the range of $0.33 to $0.35 a share, a few pennies ahead of Wall Street estimates of $0.37 a share.
The company still expects to turn a profit during the first half of fiscal 2003. With $451 million in cash, it has plenty of reserves to see it through, speed bumps and all. So, the future is coming. The one lingering question may be whether investors will stay tuned in long enough to see it.
Rick Aristotle Munarriz thinks there just aren't enough talking horse sitcoms on the tube anymore. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.
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