Wednesday, May 11, 2011

Star of the Day - Rovi (ROVI)

Quite a few of our old holdings that I have not talked about much in 2011, are having quite fantastic earning seasons.  Rovi (ROVI) is catching everyone's attention with a 20%+ type of move.  Once more I thought these were solid results (and yes raised guidance), but some of the reactions to the earnings reports are causing me to scratch my head.  Frankly I lost track of this name but I can see it has been doing pretty awful in terms of stock performance in 2011, so it could just be a sigh of relief type of rally. (Full report here)

Via Reuters:

  • Rovi Corp raised its full-year profit outlook as it begins to gain from the Sonic Solution integration.  Rovi bought Sonic Solutions, which owns the popular digital video player software DivX, for $720 million in December. 
  • Santa Clara, California-based Rovi expects full-year adjusted earnings of $2.25-$2.55 per share, raising it from its previous forecast of $2.20-$2.50 a share. Analysts on average were expecting the company to post earnings of $2.38 a share for the full year, according to Thomson Reuters I/B/E/S.
  • "I think the upside to bottom line guidance was because they are seeing higher synergies from their merger with Sonic," analyst Edward Williams with BMO Capital Markets said.   The deal, which is expected to close in the first half of this year, would add 5-10 cents per share to its adjusted earnings and would generate more than $15 million in savings in 2011, Rovi said.
  • However, the impact of the natural disaster in Japan could limit revenue growth in the $10 million range, the company said on a conference call as it sees potential sales declines and supply shortages in that market.
  • The company gets about a third of its Consumer Electronics segment (CE) revenues from Japan. The segment, which contributed about 57 percent to first-quarter revenue, includes guidance products and patents licensed to device manufacturers.
  • January-March net income came in at $17 million, or 15 cents a share, compared with $68.1 million, or 64 cents a share, a year ago. Excluding items, the company earned 61 cents a share, topping analysts' expectations of 51 cents.
  • First quarter 2011 GAAP revenues of $161.5 million, compared to $129.4 million for the first quarter of 2010.

One analyst weighs in, and thinks there is more upside to go:
  • "The convergence of the Internet and traditional media has provided Rovi with a multitude of growth opportunities," Wedbush Morgan analyst Kerry Rice wrote in a note to investors.  "Revenue growth was driven by the continued conversion of analog to digital, new international licensees, and accelerating product revenues," the analyst added, reiterating an "Outperform" rating and a target price of $72.

[July 15, 2010: All About Rovi]

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