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Thursday, May 30, 2002 |
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• Diva completes death
spiral while • Jolted by patent news, SeaChange delays earnings • Study: It's up, up, up for broadband fees • Broadcom completes Mobilink buy • On your mark, get set, sports VOD • Access-metro interop announced • Charter launches HDTV in five markets • TI and Intersil team for voice over broadband Diva completes death spiral while Collapsing under the weight of a $500 million deficit
and enough cash on hand to last a few more weeks, video-on-demand
vendor Diva Systems
Corp. completed Interactive program guide giant Gemstar-TV Guide International, holding true to rumors that have swirled for weeks, then swooped in to acquire Diva's software and technology assets. Gemstar is acquiring Diva's intellectual property for an undisclosed sum, but the two companies reached the deal as part of a pre-packaged bankruptcy. As expected, Gemstar won't pick up Diva as part of
a plan to build its own VOD company, but will instead absorb Diva's
intellectual property into its own broad patent portfolio. Gemstar
said it will incorporate some Diva-grown technologies into its
IPG technology in order "to expedite streaming video and T-commerce
capabilities." Further, Gemstar said it will leverage that technology
to push forward a deal with Thomson Multimedia to build out an "We believe the addition of Diva's server-based technology
to our IPGs, for example, will accelerate our ability to deliver
full-motion advertising, movie trailers and other promotional
content to viewers through the IPG," Gemstar and Diva said the Chapter 11 reorganization and combined asset deal should close in the next 60 to 120 days. Diva President and CEO Henk Hanselaar said the company "intends work closely with its MSO customers" through the transition. Diva's VOD clients include AT&T Broadband and
investors Charter Communications and Insight Communications While
Charter has already planned ahead for Diva's demise by signing
on Concurrent Computer Corp. as its second source of VOD hardware
and software, Insight and AT&T Broadband have not announced
similar deals with Concurrent or other VOD competitors such as AT&T Broadband, which offers VOD in the Los Angeles
and Atlanta areas, had planned to use Diva to offer the service
in Pittsburgh, Pa. and San Francisco. Related stories:
Network gear maker Cisco Systems Inc. has beefed up its virtual private networking portfolio to enable IP voice and video over an IPSec VPN. Cisco says the enhancements are part of its VPN initiative and include IP voice/video centric Quality of Service designed for interoperability with IPSec, IPSec multicast support and IP voice/video stream encryption. All Cisco IOS VPN routers offer these enhancements. Customers deploying IP telephony and video over an IPSec VPN require an end-to-end, interoperable infrastructure to support the secure delivery of toll-quality IP voice and video services, says Cisco. In a filing with the Securities and Exchange Commission, Cisco said it could pay as much as $2.5 billion for a closely held technology company. Although the company was not identified in the filing, Cisco revealed it has expensed $52 million in research and development costs related to its investment in the company. The $52 million is equal to the sum of the unidentified company's net losses. Separately, a Merrill Lynch analyst raised a "yellow flag" on Cisco's allowance for doubtful accounts. Analyst Samuel Wilson expressed concern because Cisco's allowance, which has risen to $346 million, is at its highest level ever. "We believe investors should keep a close eye on this," he said in a research note. At one point yesterday afternoon Cisco shares had fallen 49 cents, but had rebounded slightly today, up 29 cents as of 12:13 p.m. EDT.
Jolted by patent news, SeaChange delays earnings SeaChange International, admittedly "surprised and disappointed" by a potentially damaging jury verdict involving a video-on-demand patent, said Wednesday that it will postpone the release of its first quarter financial results until the beginning of next week. That decision stems from a verdict by a Delaware District Court jury yesterday that upheld rival nCUBE Corp's patent for VOD delivery, and ruled that SeaChange International has "willfully infringed" the nCUBE patent. The presiding judge has yet to hand down a final ruling. In connection, nCUBE said the jury ruled that SeaChange must pay nCUBE "over two million dollars" in damages, plus a seven percent royalty on all sales of infringing products after Feb. 1, 2002. SeaChange executives, in a conference call Wednesday afternoon with analysts and reporters, said the company needed more time to ascertain the basis of the royalty payments tied to the jury verdict, and will likely accrue those monies in the interim or until all appeals are exhausted. SeaChange said it disagreed with the verdict, but
acknowledged that the jury decision "will require material adjustments"
to the company's first quarter The company also posted record VOD system revenues
of $16.1 million, up 40 percent versus the comparable quarter
last year. SeaChange also said it shipped 60,000 video streams
for residential VOD systems, giving it an The jury decision overshadowed that bright financial
news, however, as SeaChange shares got pummeled Wednesday, closing
down 14.7 percent to $10.39 Dueling lawsuits In June 2000, SeaChange filed a lawsuit against nCUBE for patent infringement. In that case, SeaChange defended U.S. Patent No. 5,862,312, which was granted on Jan. 19, 1999. The '312 patent describes a "loosely coupled mass storage computer cluster." A different Delaware District Court jury rejected nCUBE's challenge on Sept. 25, 2000, ruling that SeaChange's patent was valid. SeaChange then asked the court to enter a judgment of infringement and a permanent injunction against nCUBE's MediaCube-4 video servers. nCUBE has since said it has developed a remedy that works around SeaChange's '312 patent. Both companies are still awaiting a final judgment pertaining to SeaChange's claim of permanent injunction and undisclosed financial damages in that case. On Jan. 8, 2001, nCUBE returned serve with its own lawsuit, alleging that SeaChange's iTV System infringed on U.S. Patent 5,805,804, which was issued to nCUBE on Sept. 8, 1998. The '804 patent describes "a unique video server architecture specially suited for VOD delivery." Further, the patent describes how video servers under that architecture can be made compatible -- "while requiring only minimal changes" -- with the existing systems of other providers. The '804 patent was the subject of Wednesday's jury verdict. Judge Joseph J. Farnan Jr. has yet to hand down a
final decision on the '804 case. He's also presiding over the
'312 case. Related story:
Study: It's up, up, up for broadband fees Whether a high-speed Internet connection is provided via cable or DSL, consumers are likely paying more for their service now than they were at the end of last year, according to one analysis. Consumer broadband rates climbed to their highest levels on record at the end of the first quarter, according to new research from ARS Inc. In the cable modem sector, monthly subscribers rates rose from $43.21 in Dec. 2001 to $44.95 in March -- marking a 4 percent increase on average. Basic ADSL subscribers were hit by a smaller overall increase, but are still paying more than cable modem subscribers. This sector posted a 1.4 percent increase from $51.09 in Dec. 2001 to $51.82 in March for basic ADSL service. Case in point, yesterday AT&T Broadband joined several of its brethren, and announced a rate increase. The company said it plans to boost cable modem service fees by $7 a month on July 1. The MSO also announced plans to standardize customer upstream speeds across its high-speed data footprint. ARS found that 91 percent of broadband service providers that have been in business since the beginning of last year have raised their rates since then. The research firm contends that industry consolidation has decreased consumers' broadband choices. "We expect this trend of raising prices will hamper the widespread adoption of broadband services and that the vast majority of users will continue to access the Internet via dial-up connections for the foreseeable future," says Mark Kersey, an ARS broadband and cable industry analyst. Although service providers are raising rates, they are still trying to attract new customers. Promotions, such as free or discounted installation and service rebates seem to be the hot ticket right now. ARS found that during the first quarter, 81 percent of providers offered free or discounted installation, which is up from 77 percent in the fourth quarter 2001. The number of providers offering a rebate on monthly service grew from 47 percent in Q4 to 58 percent in Q1 2002. Related stories:
Broadcom completes Mobilink buy Chipmaker Broadcom Corp. has wrapped up another acquisition. The latest: its purchase of Mobilink Telecom Inc. is complete, giving Broadcom an inroad to the wireless semiconductor market. Broadcom issued or reserved 5.61 million shares in exchange for all of Mobilink's shares and stock options. The acquisition, which was first announced in April, will be accounted for a purchase, and Broadcom says it will take an unspecified one-time charge in the second quarter. Mobilink makes chips and software for mobile phones and other wireless devices. Its designs work with the Global System for Mobile Communications, or GSM, wireless standard. It is also testing products that will enable Internet access over wireless devices. In the last three years, Broadcom has made 21 acquisitions. Related story:
On your mark, get set, sports VOD What better way to get clued in on the latest snowboarding or skating technique, than to watch it on television? Sports clothing producer Quicksilver and VOD content aggregator TVN Entertainment are joining forces to bring video-on-demand and subscription VOD to action sports enthusiasts. The channel, dubbed UNION* The Boardriding Channel, will sport films from Volcom, Globe, 900 Films, Opper Sports, Bluefield Entertainment and EX TV/The Extreme Group. Beginning in roughly 30 days, the action sports films will be delivered via TVN's on-demand programming and distribution platform. Financial terms were not disclosed. The duo initially will market the channel to TVN cable affiliates, including Comcast Corp., Adelphia Communications, Mediacom and Insight Communications. After the initial launch, the companies plan to expand the offering to other last mile television program providers, including cable, DSL, satellite and wireless providers. Through the use of the VOD and SVOD platform, sports fans can fast forward, rewind, pause and stop programming. Earlier this month, TVN inked a deal to handle Insight Communications' VOD needs linked to programming, transport and asset management. To deliver the services, TVN will use components such as its proprietary ADONISS platform and SST (secure satellite transmission) system. Related story:
Access-metro interop announced Merging of access and metro technologies is the focus
of a new interoperability announcement between optical transport
provider
PacketLight Networks and access switch maker
Jedai Broadband Networks. Related story:
Charter launches HDTV in five markets Charter Communications Inc. has come through with a promise made in March to deliver high-definition TV services. The MSO has launched its service in five U.S. markets. Charter customers with HDTV sets in Alhambra/Pasadena and Glendale/Burbank, Calif.; University Park/Highland Park, Texas; Miami Beach, Fla; and Birmingham, Ala. are eligible to receive HDTV programming from HBO and Showtime. During the third quarter, Charter plans to roll out HDTV service in Kalamazoo, Mich. and St. Louis. The five initial markets are using Scientific-Atlanta's Explorer 3100HD set-top box. The Kalamazoo and St. Louis systems will use Motorola Inc.'s DCT5200. On March 14, rival Comcast Cable announced plans to launch HDTV service in Washington D.C.'s metro area and in Virginia this summer, with its SportsNet coverage of pro games set to start on the service next year. The company said it plans to offer HDTV in all of its major markets by the end of the year. The Wall Street Journal reported yesterday that Charter is in talks to purchase roughly 1 million subscribers from Adelphia Communications Corp. for as much as $3.5 billion. Earlier this month, Adelphia announced plans to sell roughly half of its subscriber base to round up some much-needed cash. Related stories:
TI and Intersil team for voice over broadband Copyright 2002 M2 Communications Ltd. Analog and digital technology company
Texas Instruments Inc. has entered into an agreement with
Intersil
Corp., a wireless networking company. The financial terms of the agreement were not announced.
• Moody's downgrades AT&T rating • Unizone tests Optical Solutions FiberPath 400 is a next-generation, converged voice, video and data platform that supports IP streaming video, high data speeds, hundreds of digital and analog CATV channels and multiple carrier-class voice lines, says Optical Solutions. • FCC fines SBC
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