Liberate CEO eyes independence in merging market
(Reuters 05/16 20:05:21)
By Bob Tourtellotte
LOS ANGELES, May 16 (Reuters) - The chief of interactive TV
software provider Liberate Technologies Inc. <LBRT.O> said on
Thursday Liberate wants to remain independent if, as expected,
the industry undergoes a round of mergers and acquisitions.
Chief Executive Officer Mitchell Kertzman said he expects a
wave of consolidation among companies that provide interactive
technology to cable television operators after last week's move
by John Malone's Liberty Media Corp. <L.N> to buy a controlling
stake in Liberate rival, OpenTV Corp. <OPTV.O>.
Kertzman's industry outlook was echoed earlier this month
by Jean-Marie Racine, chief executive of a third company, Canal
Plus Technologies. All three provide software that allows cable
television operators to deploy and operate interactive TV, or
iTV, services like video on demand.
Canal Plus is a unit of French media giant Vivendi
Universal <EAUG.PA>.
While Kertzman said that he would look at any offer that
came to Liberate, the best way to optimize shareholder value
would be for Liberate to remain independent.
"If there is going to be a combination, (we want) to be the
acquiror, to add value that way," Kertzman told Reuters in an
interview. "If you have confidence in your business, which we
do, that is the way."
He admits, however, investors may be losing patience in
iTV's future as European cable operators suffering under heavy
debt and restructuring and as U.S. cable TV operators are only
slowly rolling out digital, interactive services.
That impatience can be seen in Liberate's stock price,
which is trading at or near all-time lows. It ended down 24
cents at $4.35 a share on the Nasdaq system, and touched a low
of $4.07 earlier this week.
Those numbers make investors cringe after seeing Liberate
shares hit $148.50 in December 1999. But that was in the days
of Internet investing, when iTV promised Web-like functions for
TV sets with high-speed cable and satellite connections.
"We're frustrated. I'm sure shareholders are frustrated.
But I always say I think we've done our part by executing,"
Kertzman said. "I've been doing this long enough to know that
eventually our execution will be reflected in the stock."
Indeed, Liberate has been able to regularly beat quarterly
forecasts for deploying its software in digital set-top boxes,
and Kertzman backed the company's past guidance in terms of
deployments and earnings.
Liberate has said, among other guidance, that it expects to
become profitable on a pro forma basis by the end of the second
quarter of its fiscal 2003, which ends Nov. 30, 2002.
"Ultimately, we feel pretty good about the company and
about the U.S."
Given the cable restructuring in Europe, he sees the focus
of Liberate's business shifting to the United States, and his
company is seeing its revenue mix moving from licensing fees
for software deployment to service fees from cable operators
that deploy advanced digital set-top boxes and iTV services.
"We had thought that in the quarter in which we breakeven,
the mix would be 60 percent licensing to 40 percent services.
Today, we believe it will be more like 50/50," he said.
Kertzman said as deployment growth has flattened, Liberate
has been able to continue boosting its sales by providing
services for what he called "the almost insatiable market
demand" for Liberate's services by cable TV companies.
Whereas, Liberate used to encourage investors to watch
deployments and market share for signs of growth, it is now
looking to revenue and earnings as benchmarks, Kertzman said.
((Bob Tourtellotte, 213-380-2014, Los Angeles bureau)) |
