From Red Herring
NCI revamps for mezzanine round and primps for the public markets
By Georgie Raik-Allen
Redherring.com
May 22, 1999
Network Computer has gotten a makeover. This week the Oracle (Nasdaq: ORCL) spin-off changed its name to Liberate Technologies, announced a $50 million mezzanine financing round, and filed to go public.
A pack of 11 investors participated in the funding round, including Comcast (Nasdaq: CMCSA), Cox Communications (Nasdaq: COX), General Instrument (NYSE: GIC), Hambrecht & Quist (Nasdaq: HQ), Lucent Technologies (Nasdaq: LU), Sun Microsystems (Nasdaq: SUNW), and Wind River Systems (Nasdaq: WIND).
The size of the financing round, as well as the big-name cable companies that invested, show that Liberate, which was founded to develop thin client hardware for a limp network computing market, has successfully reinvented itself as a software play for the information appliance space. The company has been pursuing a new strategic direction as a software provider for TV set-top boxes and other information appliances, such as games consoles, cell phones, and personal digital assistants.
JOCKEYING FOR POSITION
According to a report from Zona Research, a San Francisco-based consultancy, these developments indicate that "the company has garnered a key position as a software infrastructure supplier to the information appliance industry.
"The company has finally freed itself of the shackles of an unsuccessful attempt to ignite the NC market, a market that has yet to take off," the report continued.
Until recently, Liberate has had more success selling its software in Europe and Asia than in the United States, but earlier this month it announced a deal with America Online (Nasdaq: AOL) to bring its service to the television set. Liberate has also signed a deal to supply US West (NYSE: USW) with software for interactive TV and phone service.
BEHIND THE LIBERATE BALL
If more of the company's investors, including cable plays like General Instrument and consumer electronics companies like Sony (Nasdaq: SNE), Sega, and Nintendo sign up as customers, Liberate could begin to mount a formidable challenge to competitors Spyglass (Nasdaq: SPYG) and Microsoft (Nasdaq: MSFT) -- Microsoft recently demonstrated its commitment to getting its own software into set-top boxes, with a $5 billion investment in AT&T (NYSE: T).
According to its registration filing, the public offering will be underwritten by Credit Suisse First Boston, Hambrecht & Quist, and Charles Schwab. The documents also reveal that Liberate has not yet had a profitable quarter and that it expects to continue to experience losses in the short term as it grows the company.
According to the Zona report, financing from the mezzanine round and the public offering will put the company in a strong position to take on its rivals in an emerging market. "The information appliance market is largely unclaimed territory, and Liberate may well live up to its new name and emancipate access for an entirely new class of information appliance users," the report said.
The public company will trade under the ticker symbol LBRT. Liberate executives were not available for comment due to the quiet period imposed by the Securities Exchange Commission prior to a public offering.
|
