) recently acquired Durham-based cloud service firm,
Digitalsmiths Corp for a sum of $135.0 million.
Digitalsmiths is a personalized video search company.
Currently, it works with 46 blue-chip U.S. and international
service providers including seven of the top 10 Pay-TV operators
in the United States, content providers and consumer electronics
Digitalsmiths has a service that allows Pay-TV operators to
integrate search, recommendations and browsing features across
several platforms, including the likes of
) iOS and
) Android. Moreover, its transaction volume has increased
significantly to 150 million in December from 90 million in
This acquisition will enable TiVo to commercialize its
cloud-based services and technologies to operators in an
extremely cost effective way either independently or in
conjunction with its popular user interface. TiVo also expects
rapid growth from increased penetration within Digitalsmiths'
current customer base as well as through addition of new
Both TiVo and Digitalsmiths are focused on improving the
viewing experience and believe that cloud or service are the most
important mediums through which this goal can be achieved.
TiVo continues to innovate and its strong product pipeline is
a major positive going forward. The resolution of patent
litigation issues removes a major overhang on the company.
We believe that TiVo has significant growth opportunities in
Western Europe and Latin America, given its partnerships with
local providers. TiVo's strong balance sheet will also enable the
company to pursue strategic acquisitions. Its aggressive share
buyback program will boost growth in the near term.
However, increasing competition from the likes of
) and Apple remains a major overhang. Additionally, higher
investments on research and product developments will keep
margins under pressure in the near term.
Currently, TiVo has a Zacks Rank #3 (Hold).
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