We upgrade our recommendation on
Liberty Global Inc.
) to Neutral based on our view that the company is gradually
establishing its strong foothold in the European cable MSO market.
Though the company's second quarter of 2012 financial results fell
below the Zacks Consensus Estimates, Liberty Global added a net
364,000 organic revenue generating units, up by a whopping 61% year
over year. Despite the fact that the company's second quarter
always remains seasonally weak, operating metrics appeared
We believe the long-term business fundamental of the company is
very intriguing, primarily due to strong demand for its digital
cable TV service, faster broadband, and triple-play bundled
offerings. Chellomedia, the international content division of
Liberty Global, recently completed two vital deals.
Chellomedia has bought 13 movie channels of Metro-Goldwyn-Mayer
Studio Inc. in Europe, the Middle East, and Latin America. It also
acquired the remaining 50% stake of its MGM Latin America venture
and the remaining 49% stake of its MGM Central Europe venture. The
second deal was the extension of its existing relationship with
Liberty Global has recently launched a hybrid IP video gateway
called "Horizon TV" in the Netherlands. This innovative IP gateway
will combine cable operator's video services with web-based content
through an integrated cable modem. Horizon runs on Atom CE
The new web-based hybrid modem includes an open software
developer platform and application store. Furthermore, customers
can share TV showing in multiple screens such as computers,
) developed iPhones and iPads. Horizon TV also features an in-build
application store for YouTube, Wikipedia and Facebook. This service
will be extended in Switzerland, Germany, and Ireland within the
next 3-6 months.
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