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Tuesday, March 26, 2002 |
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• Liberate Cuts Losses, Raises Outlook • Network Associates Under SEC Probe, Puts Off McAfee.com Deal • RCN Renegotiates Credit Agreement • CIENA Cuts 650 Jobs, Takes $360 M In Charges • Buzztime Heads To Moto Platform • Small Companies Seen As Untapped Market For Broadband • Finnish Telecom Group Sonera To Merge With Sweden's Telia • WorldCom Plans Trial Of New Wireless Technology
Liberate Cuts Losses, Raises Outlook
Liberate Technologies narrowed its losses for its third fiscal quarter and lifted its outlook for the coming quarters, predicting it will go into the black in the second half of this year. The interactive TV platform provider expects interactive TV deployments to accelerate through 2003, with the majority of North American cable customers opting for its more simplified ITV platform. The San Carlos, Calif.-based company posted pro forma revenues totaled $24.6 million for the quarter, up 65 percent from the $14.9 million posted in the fourth quarter 2001. Pro forma net loss was $5 million, for the quarter ending Feb. 29, compared to $8.9 million loss in the same quarter 2001. Pro forma basic net loss was 5 cents a share, beating First Call estimates of 7 cents a share. Liberate so far had approximately 2.8 million in deployments worldwide and expects to add another 500,000 to 1 million subscribers by the end of this year. To goose along the North American ITV market and assure a more predictable licensing revenue stream, Liberate has renegotiated key contracts with cable operators, offering them discounts if they roll out interactive services sooner than later. "Some of the MSOs will be able to get a benefit for the lower pricing tiers for their earlier deployment," said CEO Mitchell Kertzman said. "As we exit this quarter we have a much higher level of confidence that North American MSOs are on track for deployment." Liberate has already deployed with Insight Communications LLC in the Midwest, and the company is in discussions with all of the major MSOs. Kertzman wouldn't name specific MSO, but "I would say we are at some level of activity in terms of discussion with everyone in North America." The recent announcement Charter Communications Inc. would delay deploying rival Microsoft Corp.'s interactive TV platform in its systems might appear to be in Liberate's favor, "but I wouldn't want to set expectations that is going to turn into something new with Charter," Kertzman added. Liberate also announced the first set of partners qualified for its POP TV premium developer's program announced in January. The first crop of premium partners includes Buzztime Entertainment, Inc., Caiman Technologies, Cylo, ExtendMedia, Gist, Massive, MetaTV, Mindhouse, NDS, Picotent, Pixelpark, Two Way TV, Victoria Real, Visionik, and Visiware.
AT&T debuted a new Media Network Operations Center aimed at content providers intent on distributing IP video across the Internet in pay-per-view and subscription models. The center will provide enhanced monitoring and management services for broadcast video and rich media content over AT&T's nationwide ATM network. The center will use AT&T's Intelligent Content Distribution Service and IP backbone to deliver new streaming capabilities. AT&T said the media center will provide content acquisition, encoding, storage and central casting services with two viewing options. For instance, customers could register and pre-pay for a sporting event that is scheduled to be aired on the Internet. AT&T would distribute the event to edge servers to speed delivery of the content to end-users when the event airs. Consumers could also access and pay for content on a per-use basis, AT&T said.
Network Associates Under SEC Probe, Puts Off McAfee.com Deal
Network security supplier Network Associates is the subject of an investigation by the U.S. Securities & Exchange Commission regarding its fiscal year 2000 accounting practices, it says. The company also will postpone its offer for McAfee.com common stock. Network Associates says it believes the inquiry covers issues that occurred before the current management was on board in early 2001. It says it's reviewed its 2000 accounting with outside auditors, which it did not name, and "continues to believe the accounting was proper." It will work cooperatively with the SEC, it says. The company also says it will put off starting its proposed offer to exchange 0.675 shares of its common stock for each share of McAfee.com Class A common stock, an offer McAfee.com yesterday called "financially inadequate."
RCN Renegotiates Credit Agreement
RCN Corp. has successfully amended its credit agreement with lender banks to effectively cut away approximately $200 million in debt restrictions and eliminate some restrictions. At the end of 2001, RCN had approximately $1.9 billion in debt, including $750 million in senior secured debt. With the new agreement, RCN will have $650 in cash and $1.7 billion in outstanding debt, with $563 million in senior debt. "The bottom line is that the additional financial flexibility provided by the new amendment allows RCN to continue its efforts to reduce costs, improve operating margins, and expand our customer base in our existing markets," said David McCourt, RCN's chairman and CEO, in a release. "We look forward to bringing more customers onto our network and selling them more bundled services." Under the reforged agreement, RCN can use up to $250 million in new funding to pay down its debt, keep the first $100 million yearly in asset sales and gain the right to a $187.5 million revolving loan two years from now. Revised covenants in the agreement will also give RCN a cash cushion and the ability to sell non-core assets if it chooses. The company also can form a joint venture to develop its California market and can obtain letters of credit to support its business operations. In return, RCN has agreed to pay down $187.5 million of its outstanding term load and it will take a $62.5 million reduction in its $250 million revolving loan facility. RCN also will not draw down its remaining $187.5 million revolving loan facility for at least two years.
CIENA Cuts 650 Jobs, Takes $360 M In Charges
Effective immediately, CIENA Corp. cut 650 jobs and will take up to $360 million in second-quarter charges. The company cites market changes during the past year for the cuts. The layoffs will save about $145 million to $155 million annually, it says, including $85 million to $90 million in operating costs, before restructuring charges. Most savings will occur in its third quarter. The company will pay the laid-off worker through May 24, and offer additional severance packages, outplacement assistance and training, CIENA says.
Buzztime Heads To Moto Platform
Interactive game developer Buzztime Entertainment has joined with middleware provider Liberate Technologies to create a Buzztime gaming channel for Motorola DCT2000 series set-top boxes. Buzztime already has a deal with Scientific-Atlanta to integrate Buzztime into the Explorer 2000 series. S-A also has made an investment in Buzztime. Buzztime's content includes trivia games, most notably games on the NTN Network available in 3,600 restaurants. The Liberate deal gives Buzztime access to the 10-million+ digital set-tops in the market today.
Small Companies Seen As Untapped Market For Broadband
Small and medium-size businesses represent "huge digital opportunity" if they can be persuaded to buy into broadband, Undersecy. of Commerce-Technology Phillip Bond said Mon. at roundtable on broadband and business productivity. Most companies haven't made broadband central to their operations, he said. In fact, he said, National Federation of Small Businesses (NFIB) survey found that by margin of 6-1 small enterprises didn't see Internet as critical to their success. Among other reasons small companies should embrace broadband is that it will facilitate what could be killer application, "human-to-human communications" such as telecommuting, said William Mularie of the Telework Consortium. Telework could solve 2 critical problems, he said: (1) Highway congestion caused by commuters. (2) Personal security concerns. After Sept. 11, Mularie said, people are taking closer look at how employees and company assets are often centralized at single location, such as Cantor Fitzgerald's office in World Trade Center. However, he said businesses now couldn't operate in distributed fashion because of current technology. For smaller businesses, broadband is essential to connecting them with their customers and trading partners wherever they may be, said Mike Weir of Cisco Systems. Accenture's Paul Nunes said that to get ahead, small and medium-size enterprises (SMEs) needed greater interactivity with customers without having to add new employees. NFIB's Bruce Phillips said it was all about getting more bang for buck. In NFIB survey last spring, 48% of respondents said there was no competitive disadvantage to not having broadband, he said. Many small companies still faxed documents because their software wasn't compatible with that of larger businesses, Phillips said, and SMEs involved in business-to-business (B2B) activities were on very elementary level. Until SMEs understand benefits of B2B, he said, they won't be convinced of need for broadband. Bruce Josten of the U.S. Chamber of Commerce said that for small companies, computer technology was useful but one that wasn't central to their businesses. Citing U.S. and Canadian studies, he said benefits of Internet weren't apparent to many SMEs, which used it mainly for e-mail. Studies suggest that local businesses with local employees and customers don't see need for Internet connectivity and technology, Josten said, and E-business must be "proven as essential to them." Toby Redshaw of Motorola said the small business sector would become "massively important" as broadband was deployed. SMEs are more agile, he said, and can adapt their technology more easily than big companies. Redshaw said they also would be able to "aggregate and confederate" very quickly to amass negotiating power with larger corporations. IBM's Chris Caine said one way to link SMEs could be through "grid computing" -- virtual set of distributed information technology (IT) services that would let SMEs link up without having to buy IT products themselves, but that won't happen without broadband. Govt. should lead by example, several speakers said.
For instance, Caine said, govt. doesn't even know how many of
its non-hq facilities are connected by broadband. Harris Miller
of Information Technology Assn. of America said that if govt.
wasn't using telework, SMEs wouldn't either. But Dylan Brooks of Jupiter Media Metrix countered that industry shouldn't wait for govt. to show way. Govt. has spurred demand for broadband by getting it to schools and libraries, he said, but it's still not available to consumers and SMEs. Miller proposed private sector-govt. partnership to develop case studies for use in educating SMEs about benefits of broadband.
Finnish Telecom Group Sonera To Merge With Sweden's Telia
State-controlled telecommunication groups Sonera of Finland and Telia of Sweden on Tuesday announced plans to merge, creating what would be a dominant operator in the Nordic region. The larger Telia said it would offer 1.5144 shares for each share of Sonera. The offer represents a 15.8 percent premium to Sonera's closing share price of 5.70 (dlrs 5) on March 22, the companies said. Under terms of the deal, Telia's shareholders will own roughly 64 percent of the combined company, while Sonera shareholders would get 34 percent, according to a statement. The combined company, based in the Swedish capital, Stockholm, would be the dominant telecom operator in the Nordic and Baltic regions, with interests in Russia and continental Europe. The combined market capitalization is roughly 17 billion euros (dlrs 14.9 billion). The chief executive of the new company, whose name will be decided later, will be chosen from outside the group, the two companies said. The Swedish government is the largest shareholder in Telia, with a 70.6 percent stake, while the Finnish state has a 53 percent stake in Sonera. The announcement was widely expected after days of speculation about a new round of merger talks between the two companies, which have failed in several previous attempts to unite. Sonera's chief executive Harri Koponen will serve as deputy chief executive and Sonera's chairman Tapio Hintikka will serve as chairman of the combined company, the statement said. Telia's chief executive Marianne Nivert had earlier announced plans to retire this fall. Sonera employs 10,500 people. In 2001, its net profit fell by more than 70 percent to 409 million euros (dlrs 356 million) while sales rose 6 percent to 2.18 billion euros (dlrs 1.9 billion). Stockholm-based Telia, which was partially privatized in June 2000, employs 25,000 people. Its net sales were 57.1 billion kronor (dlrs 5.4 billion) in 2001, up 6 percent compared to 2000.
WorldCom Plans Trial Of New Wireless Technology
As Sprint Corp. continues to evaluate whether its wireless broadband service will be taken out of the freezer, WorldCom Inc. officials say they expect to begin testing next-generation wireless technology this year. The next-generation technology, which eliminates the need for a line-of-sight link from the customer to the network antenna, will carry the high-speed link to additional corners of the Kansas City area, said Kerry McKelvey, president of WorldCom Broadband Solutions. McKelvey said WorldCom planned to roll out the next-generation service late this year or early next year. Westwood-based Sprint, meanwhile, which owns the right to provide fixed-wireless broadband service in 90 markets around the country -- not including Kansas City -- said it still was evaluating whether to move forward deploying the technology. WorldCom and Sprint own licenses for radio spectrum that allow them to offer the wireless high-speed service, an alternative to DSL and cable modems. WorldCom began offering its fixed-wireless service to small and medium-size business customers in the Kansas City area last year. The company offers the service in a dozen other markets around the country. But Sprint service, branded Sprint Broadband Direct, remains stalled. Since last October, when executives froze the service, new customers have not been added. Sprint has maintained service for the customers in 14 markets who already were on board. Before continuing sales of the service -- or calling it off altogether -- Sprint officials have said they are waiting to see whether next-generation fixed-wireless service can be delivered less expensively. The first-generation service must be installed by the company. An antenna on the customer's roof has to be aimed directly toward the network antenna, avoiding trees, buildings, hills and other obstacles. WorldCom's first-generation service requires the same cumbersome installation process as Sprint's, but the company said it had made the business work by focusing on business customers, who tend to generate more revenue and who are willing to pay an installation fee. But for Sprint, about 80 percent of its fixed-wireless customers are consumers, which makes the line-of-sight requirement a bigger impediment. Though top Sprint officials have said the company could make a hefty profit if it sold its fixed-wireless spectrum to a spectrum-hungry wireless carrier, a company spokeswoman said last week that next-generation technology could keep Sprint in the fixed-wireless business. "We remain hopeful that the advantages those next-generation technologies will bring will help to make fixed wireless a viable consumer broadband product," said Melinda Teimeyer, the spokeswoman. Broadband Briefs: • Forrester Research expects IT sector spending to reach double-digit growth in 2003, an earlier turnaround than some analysts were expecting. Forrester projects IT spending will rise 3.9 percent in 2002, up from a 2.2 percent previous forecast, with pegged 2003 at 10.4 percent. Forrester said the drivers would be Web services software spending, cheaper integrated circuits and broadband's effect on consumer electronics devices. • The Daily Record reports that Fort Lee, N.J.-based Everest Broadband Networks, a metropolitan broadband services provider serving businesses in North America, signed a contract to use BroadWorks from BroadSoft Inc. to add voice services to its portfolio of enhanced services. Gaithersburg-based BroadSoft makes telephone systems software. • Time Warner Cable-Houston will use CSG Systems'
Workforce Express software to automatically route technicians
to assignments, based on skills and location, from a single desktop
and in real time. The tools also allow detailed directions for
technicians via a Web-enabled cell phone. TWC Houston has 650,000
customers in the Houston area. • Comcast launched its high-speed Internet service
in the District of Columbia, where it will offer all public schools
and libraries the service at no cost. The cableco also trained
metro-area teachers, for free, in ways to use broadband in the
classroom. The service will start with residents in the Southeast
area and will be offered in other parts of the city as Comcast
upgrades its fiber network. The school service will debut with
Ketcham Elementary School. • AT&T Broadband set up a new training program for its technicians that's designed to consolidate skills in troubleshooting, installation and repair. Before the cableco set up the three-week intensive training, customers with multiple AT&T Broadband services had separate service appointments. The program is designed to let one technician handle separate problems in one appointment, the company says. • Cox Communications alerted its Wichita, Kan., customers that it will switch from the Road Runner service it's been using, to its own high-speed Internet service. The company will contact Road Runner customers in early May about the transition, The Wichita Eagle reports. Cox has more than 115,000 customers in the city. • The Cable Center launched its distance learning program with a speech by former Clinton Press Secretary Mike McCurry. The talk, to 20 University of Denver students who made the trip to C-SPAN's Washington, D.C., studio, was taped as part of the five-year pilot program. The second course starts March 29, and will connect 28 students to the studio via a real-time video link. No word on the curriculum for the second course, but the links will let students study C-SPAN archives and interact with guests. The pilot is a project with The Cable Center, DU and C-SPAN, a private, nonprofit running 24-hour coverage of the political process.
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