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SeaChange International Reports Fourth Quarter and Full Year Fiscal 2012 Results

SeaChange International, Inc. (NASDAQ: SEAC), an industry leading multi-screen video software company, today reported revenue of $51.7 million (excluding $2.4 million in revenues related to discontinued operations) and a non-GAAP income per share from continuing operations of $0.18 for the fourth quarter ended January 31, 2012. In comparison, fourth quarter fiscal 2011 revenue was $57.9 million and non-GAAP income per share from continuing operations was $0.19, respectively. The Company’s fourth quarter and full year financial results reflect the impact of its previously announced agreement to sell its former broadcast servers and storage business while retaining its video streaming software and related hardware business; accordingly, the Company has reflected this business as discontinued operations in its financial statements for fiscal 2012 and for comparative purposes in prior periods. The Company posted a GAAP loss from continuing operations for the fourth quarter of fiscal 2012 of approximately $3.5 million compared with GAAP income from continuing operations of $11.2 million for the fourth quarter of fiscal 2011. Included in the fourth quarter fiscal 2012 loss from continuing operations were restructuring charges of $3.1 million, primarily related to headcount reductions, and $1.8 million of earn-out expenses related to prior acquisitions, whereas in the fourth quarter of fiscal 2011, the Company recorded a gain on the sale of an affiliate for $1.9 million.

For the fiscal year ended, January 31, 2012, the Company posted total revenues of $197.7 million, which was approximately $4.0 million lower than total revenues of $201.7 million for fiscal 2011. However, non-GAAP income from continuing operations for fiscal 2012 was $16.4 million, or $0.51 per share, compared with non-GAAP income from continuing operations of $15.7 million, or $0.49 per share, for the same prior period. The Company posted a GAAP loss from continuing operations of approximately $1.3 million in fiscal 2012 compared to GAAP income from continuing operations of $31.6 million for fiscal 2011, as that year included a $27.1 million pre-tax gain on the sale of the Company’s equity investment in Casa Systems, Inc. and InSite One, Inc. Included in the Company’s total fiscal 2012 loss from continuing operations are costs related to restructuring charges, primarily as a result of headcount reductions, and earn-out expenses related to prior acquisitions which together totaled approximately $6.6 million.

“With intense focus on execution, we ended fiscal 2012 with our strongest quarterly operating performance of the year,” said Raghu Rau, Chief Executive Officer, SeaChange. “Our focus in fiscal 2013 is on the execution of our strategy to transform the Company into a pure-play software provider, lowering our overall cost structure, delivering industry leading, next generation solutions and achieving superior financial results. We recently announced the divestiture of our broadcast servers and storage business and are actively engaged in the potential divesture of other non-core assets that do not fit into our long-term business strategy.”

Mr. Rau continued, “In addition to the $ 5.0 million in annualized cost reductions announced earlier this year and the significant reductions in operating expenses as a result of the divestiture of the broadcast servers and storage business, we expect further operating expense reductions in the first half of this year through product and market rationalization and reductions in general and administrative costs. We will continue to invest significantly in research and development by moving investments from legacy to next generation products and building our intellectual property. In fiscal 2013, SeaChange will become a leaner and more agile company focused on bringing new products to market that deliver a competitive advantage to our service provider customers and drive increased value for our shareholders.”

The Company ended fiscal year 2012 with cash, cash equivalents and marketable securities of $93.8 million compared to $88.9 million at the end of the third quarter of fiscal 2012. The increase in cash was primarily attributable to cash generated from operations.

Annual Outlook:

“We are excited about the prospects for a transformed SeaChange in fiscal 2013,” said Mr. Rau. “We anticipate full year fiscal 2013 total revenues to be in the range of $188 million to $200 million with software revenues to be in the range of $150 million to $160 million and media services revenues to be in the range of $38 million to $40 million. We also anticipate full year non-GAAP total operating income to be in the range of $19.5 million to $23.5 million as we anticipate the software segment accounting for $17 million to $20 million and media services segment accounting for $2.5 million to $3.5 million of this range. For the first quarter of fiscal 2013, we expect software revenues to be in the range of $35 million to $37 million taking into account certain product and market rationalization efforts, including exiting unprofitable products and markets, and media services revenues to be in the range of $7.8 million to $8.2 million.”

The Company will host its fourth quarter and full year fiscal 2012 conference call on Thursday, March 29, 2012 at 8:30 a.m. E.T. The live webcast can be accessed at www.schange.com/ir. Supplemental financial information and prepared remarks for the conference call will be posted to the Investor Relations section of our website simultaneously with this press release.

About SeaChange International

Ranked among the top 250 software companies in the world, SeaChange International (NASDAQ: SEAC) enables transformative multi-screen video services through an open, cloud-based, intelligent software platform trusted by cable, IPTV and mobile operators globally. Personalized and fully monetized video experiences anytime on any device, in the home and everywhere, are the product of the Company’s superior back office, advertising, content and home gateway offerings.

SeaChange’s hundreds of customers are many of the world’s most powerful media brands including all major cable operators in the Americas and Europe, and the largest telecom companies in the world. Headquartered in Acton, Massachusetts, SeaChange is TL 9000 certified and has product development, support and sales offices around the world. Visit www.schange.com.

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including without limitation statements regarding the divestiture of the Broadcast Servers and Storage business unit, including the potential impact on the Company, the Company’s business focus and future financial performance, are neither promises nor guarantees and may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements contained herein are based on current assumptions and expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. Factors that could cause actual future results to differ materially from current expectations include the following: the continued growth, development and acceptance of the multi-screen video market; the loss of one of the Company's large customers; the ability of the Company to transition to a pure-play software company; the effectiveness of the Company’s cost-cutting measures; the uncertainties introduced by our evaluation of strategic alternatives; the cancellation or deferral of purchases of the Company’s products; the length of our sales cycles; the Company’s ability to manage its growth; the ability of the Company to successfully sell its Broadcast Servers and Storage business unit and non-core assets; the effectiveness of the Company’s disclosure controls and procedures and internal controls over financial reporting; the Company’s ability to protect its intellectual property rights and the expenses that may be incurred by the Company to protect its intellectual property rights; an unfavorable result of current or future litigation; content providers limiting the scope of content licensed for use in the video-on-demand market; the Company’s ability to successfully introduce new products or enhancements to existing products on a timely basis; the Company's ability to compete in its marketplace; the Company’s ability to respond to changing technologies; the risks associated with international sales and operations; changes in the regulatory environment; the Company’s ability to integrate the operations of acquired subsidiaries; the Company’s ability to hire and retain highly skilled employees; and increasing social and political turmoil.

Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents made by the Company from time to time with the Securities and Exchange Commission, including but not limited to, those appearing under the caption "Certain Risk Factors" in the Company’s Annual Report on Form 10K filed on April 14, 2011. Any forward-looking statements should be considered in light of those factors. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statements to reflect any change in Company expectations or events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results may differ from those set forth in the forward-looking statements.

Use of Non-GAAP Financial Information

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that we believe are helpful in understanding our past financial performance and future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and make operating decisions. Our non-GAAP financial measures include adjustments based on the following items, as well as the related income tax effects and adjustments to the valuation allowance:

Revenue: Business combination accounting rules require us to account for the fair value of customer contracts assumed in connection with our acquisitions. In connection with the acquisitions of eventIS Group B.V. on September 1, 2009, and VividLogic, Inc. on February 1, 2010, the book value of our deferred software revenue was reduced by approximately $6.0 million in the adjustment to fair value. Because these customer contracts may take up to 18 months to complete, our GAAP revenues subsequent to these acquisitions do not reflect the full amount of software revenues on assumed customer contracts that would have otherwise been recorded by eventIS Group B.V. and VividLogic, Inc. In addition, we accelerated revenue recognition on a significant terminated contract in fiscal 2011. We believe these adjustments are useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on similar customer contracts, although we cannot be certain that customers will renew these contracts.

Stock-based compensation expenses: We have excluded the effect of stock-based compensation and stock-based payroll expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP operating expenses and net income measures. Amortization of intangibles is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangibles assets will recur in future periods.

Acquisition related costs: We incurred significant expenses in connection with our acquisitions of eventIS Group B.V. and VividLogic, Inc. and also incurred certain other operating and non-operating expenses, which we generally would not have otherwise incurred in the periods presented. Acquisition related and other expenses consist of transaction costs, costs for transitional employees, other acquired employee related costs, integration of related professional services and changes in contingent liabilities related to estimated earn-out payments. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Restructuring: We incurred significant expenses in connection with selected headcount reductions, a write-down of inventory to net realizable value reflecting the discontinuance of certain inventory components, and the disposal of fixed assets. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Strategic alternatives-related costs: We incurred significant legal and other professional fees in connection with the Company’s review of strategic alternatives. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Income from sale of investments in affiliates: For fiscal 2011 only, this reflects the gain, excluding any tax effects, on the sale of our investment in Casa Systems. This is considered a one-time event and not included in the financial results of our continuing operations.

Impairment of asset held for sale: We incurred a significant write-down of an owned property in connection with the divesture of our former servers and storage business segment. We believe it is useful for investors to understand the effects of this item on our other expenses.

Income tax expense (benefit): The income tax adjustment reflects the effective tax rate for the year in which the non-GAAP adjustment occurs and excludes any changes in the tax valuation allowance.

 
 
SeaChange International, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
           
January 31, 2012 January 31, 2011
Assets (unaudited)
Cash and marketable securities

$93,780

$ 86,196
Accounts receivable, net 55,145 54,487
Inventories, net 10,218 11,041
Prepaid expenses and other current assets 10,760 10,731
Assets held for sale 646 -
Property and equipment, net 30,566 34,858
Goodwill and intangible assets, net 87,401 94,985
Other assets 5,054 7,124
Assets related to discontinued operations   5,465   5,769
Total assets $

299,035

$ 305,191
 
 
Liabilities and Stockholders’ Equity
Accounts payable and other current liabilities $ 31,914 $ 31,953
Deferred revenues 36,473 40,643
Other long term liabilities 9,204 12,392
Deferred tax liabilities and income taxes payable 7,727 7,735
Liabilities related to discontinued operations   2,779   3,326
Total liabilities   88,097   96,049
 
Total stockholders’ equity   210,938   209,142
Total liabilities and stockholders’ equity $ 299,035 $ 305,191
                 
 
SeaChange International, Inc.
Condensed Consolidated Statement of Operations - Unaudited
(in thousands, except per share data)
             
Three Months Ended Twelve Months Ended

January 31,
2012

January 31,
2011

January 31,
2012

January 31,
2011

 
Revenues $ 51,697 $ 57,883 $ 197,705 $ 201,687
Cost of revenues   25,387     26,312     99,693     98,832  
Gross profit   26,310     31,571     98,012     102,855  
 
Operating expenses:
Research and development 9,984 10,340 40,692 44,569
Selling and marketing 4,812 5,156 21,619 21,055
General and administrative 5,623 6,076 24,116 23,647
Amortization of intangibles 955 847 3,923 3,359
Acquisition costs 1,795 430 3,312 764
Restructuring   3,095     53     3,316     6,997  
Total operating expenses   26,264     22,902     96,978     100,391  
Income from operations 46 8,669 1,034 2,464
Gain on sale of investment in affiliate - 1,883 - 27,071
Other expense, net   (730 )   (495 )   (358 )   (418 )
(Loss) income before income taxes and equity (loss) income in earnings of affiliates (684 ) 10,057 676 29,117
Income tax (benefit) provision 2,680 (788 ) 2,193 (2,438 )
Equity (loss) income in earnings of affiliates, net of tax   (176 )   369     233     85  
(Loss) income from continuing operations $ (3,540 ) $ 11,214   $ (1,284 ) $ 31,640  
Loss from discontinued operations $ (1,285 ) $ (261 ) $ (2,730 ) $ (2,172 )
Net (loss) income $ (4,825 ) $ 10,953   $ (4,014 ) $ 29,468  
Earnings per share:
Basic (loss) income per share $ (0.15 ) $ 0.35   $ (0.13 ) $ 0.94  
Diluted (loss) income per share $ (0.15 ) $ 0.34   $ (0.13 ) $ 0.92  
Earnings per share from continuing operations:
Basic (loss) income per share $ (0.11 ) $ 0.35   $ (0.04 ) $ 1.01  
Diluted (loss) income per share $ (0.11 ) $ 0.35   $ (0.04 ) $ 0.99  
Earnings per share from discontinued operations:
Basic (loss) income per share $ (0.04 ) $ 0.00   $ (0.09 ) $ (0.07 )
Diluted (loss) income per share $ (0.04 ) $ (0.01 ) $ (0.09 ) $ (0.07 )
Weighted average common shares outstanding:
Basic 32,206 31,558 32,093 31,434
Diluted 32,206 32,152 32,093 31,986
                 
 
SeaChange International, Inc.
Condensed Consolidated Operating Segments - Unaudited
(in thousands)
           
Three Months Ended Twelve Months Ended

January 31,
2012

January 31,
2011

January 31,
2012

January 31,
2011

Software
Revenue:
Products $ 19,490 $ 24,699 $ 73,157 $ 82,155
Services   23,835   26,758     91,635   91,501
Total revenue 43,325 51,457 164,792 173,656
Gross profit 24,700 31,211 93,157 98,064
Operating expenses:
Research and development 9,984 10,340 40,692 44,569
Selling and marketing 4,812 5,156 21,619 21,055
General and administrative 526 529 2,032 1,465
Amortization of intangibles 922 774 3,784 3,073
Acquisition costs 1,795 430 3,312 764
Restructuring   2,145   53     2,366   6,085
  20,184   17,282     73,805   77,011
Income from operations $ 4,516 $ 13,929   $ 19,352 $ 21,053
 
Media Services
Service revenue $ 8,372 $ 6,426 $ 32,913 $ 28,031
Gross profit 1,610 360 4,855 4,791
Operating expenses:
General and administrative 525 912 3,421 4,026
Amortization of intangibles   33   73     139   286
  558   985     3,560   4,312
Income (loss) from operations $ 1,052 $ (625 ) $ 1,295 $ 479
 
Unallocated Corporate
Operating expenses:
General and administrative $ 4,572 $ 4,635 $ 18,663 $ 18,156
Restructuring   950   -     950   912
Total unallocated corporate expenses $ 5,522 $ 4,635   $ 19,613 $ 19,068
       
Consolidated income from operations $ 46 $ 8,669   $ 1,034 $ 2,464
                         
 
SeaChange International, Inc.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures - Unaudited
(in thousands)
                           
Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended
January 31, 2012 January 31, 2011 January 31, 2012 January 31, 2011
 
GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP
Revenues $ 51,697 $ 51,697 $ 57,883 - $ 57,883 $ 197,705 $ 197,705 $ 201,687 $ 201,687
 
Deferred revenue-acquisition related (1) - - (12 ) (12 ) - 3,876 3,876
Deferred revenue-maintenance acceleration (2)     (12 )   (12 )     (4,559 )   (4,559 )     7   7       (4,559 )   (4,559 )
  51,697     (12 )   51,685     57,883     (4,571 )   53,312     197,705     7   197,712     201,687     (683 )   201,004  
 
Operating expenses 26,264 26,264 22,902 22,902 96,978 96,978 100,391 100,391
Stock-based compensation (3) - (209 ) (209 ) - 1,532 1,532 - 2,869 2,869 - 2,720 2,720
Amortization of intangible assets (4) - 1,474 1,474 - 1,429 1,429 - 6,081 6,081 - 5,345 5,345
Acquisition related costs (5) - 1,795 1,795 - 430 430 - 3,312 3,312 - 1,595 1,595
Restructuring (6) - 3,095 3,095 - 53 53 - 3,316 3,316 - 6,997 6,997
Strategic alternatives related costs (7)   -     508     508     -     -     -     -     1,762   1,762     -     -     -  
  26,264     6,663     19,601     22,902     3,444     19,458     96,978     17,340   79,638     100,391     16,657     83,734  
 
(Loss) income from operations 46 6,651 6,697 8,669 (1,127 ) 7,542 1,034 17,347 18,381 2,464 15,974 18,438
 
Gain from sale of investments in affiliates (8) - - - 1,883 (1,883 ) - - - - 27,071 (27,071 ) -
Impairment of asset held for sale (9) (678 ) 678 - (678 ) 678 -
 
Income tax impact expense (benefit) (10)   2,680     2,115     565     (788 )   2,137     1,349     2,193     385   2,578     (2,438 )   4,865     2,427  
(Loss) income from continuing operations (3,540 ) 9,444 5,904 11,214 (5,147 ) 6,067 (1,284 ) 17,640 16,356 31,640 (15,962 ) 15,678
(Loss) from discontinued operations   (1,285 )   493     (792 )   (261 )   137     (124 )   (2,730 )   1,127   (1,603 )   (2,172 )   237     (1,935 )
Net income (loss) $ (4,825 ) $ 9,937   $ 5,112   $ 10,953   $ (5,010 ) $ 5,943   $ (4,014 ) $ 18,767 $ 14,753   $ 29,468   $ (15,725 ) $ 13,743  
Earnings per share: $ (0.15 ) $ 0.31     0.16   $ 0.34   $ (0.16 ) $ 0.18   $ (0.13 ) $ 0.59 $ 0.46   $ 0.92   $ (0.49 ) $ 0.43  
Earnings per share from continuing operations: $ (0.11 ) $ 0.29   $ 0.18   $ 0.35   $ (0.16 ) $ 0.19   $ (0.04 ) $ 0.55 $ 0.51   $ 0.99   $ (0.50 ) $ 0.49  
Earnings per share from discontinued operations: $ (0.04 ) $ 0.02   $ (0.02 ) $ (0.01 ) $ 0.00   $ (0.01 ) $ (0.09 ) $ 0.04 $ (0.05 ) $ (0.07 ) $ 0.01   $ (0.06 )
Diluted weighted average common shares outstanding 32,206 32,206 32,206 32,152 32,152 32,152 32,093 32,093 32,093 31,986 31,986 31,986
   
(1) Business combination accounting rules require us to account for the fair value of deferred revenue assumed in connection with an acquisition.

This non-GAAP adjustment reflects the full amount of software contract revenue that would have otherwise been recorded subsequent to our acquisition of eventIS Group B.V. and VividLogic, Inc.

 
(2) Recognition of previously deferred maintenance revenues from customer termination notice.
 
(3) For GAAP purposes, stock-based compensation is included in the following expense categories:
             
Three Months Ended   Twelve Months Ended

January 31,
2012

   

January 31,
2011

January 31,
2012

   

January 31,
2011

Cost of revenues $ 22 $ 183 $ 405 $ 330
Research and development 168 123 73 392
Selling and marketing (396) 476 609 746
General and administrative (3) 750 1,782 1,252
Total stock-based compensation $ (209) $ 1,532 $ 2,869 $ 2,720
 
(4) The intangible assets recorded at fair value as a result of our acquisitions are amortized over the estimated useful life of the related asset.

Amortization expense related to intangible assets is included in the following expense categories:

 
Three Months Ended   Twelve Months Ended

 

January 31,
2012

January 31,
2011

January 31,
2012

January 31,
2011

 
Cost of revenues: $ 519 $ 582 $ 2,158 $ 1,986
Operating expenses: 955 847 3,923 3,359
Total amortization of intangibles $ 1,474 $ 1,429 $ 6,081 $ 5,345
 
(5)

We incurred expenses in connection with our acquisitions which would not have otherwise occurred in the periods presented as part of our operating expenses.

 
(6)

We incurred charges due to the restructuring of our business including severance charges, write-down of inventory and disposal of fixed assets, which we generally would not have otherwise incurred in the periods presented as part of continuing operations.

 
(7) We incurred legal and other professional fees in connection with the Company's review of strategic alternatives.
 
(8) Reflects the gain on the sale of the equity investment in Casa Systems and InSite One, Inc.
 
(9) We incurred an impairment charge from the write-down of building held for sale.
 
(10)

The non-GAAP income tax adjustment reflects the effective income tax rate in which the non-GAAP adjustment occurs and any exclusion of changes in the tax valuation allowance.

 
 

SeaChange International, Inc.
Fourth Quarter and Full Year Fiscal Year 2012 Results
Prepared Remarks
March 29, 2012

SeaChange is providing a copy of these prepared remarks in combination with its press release. This process and these remarks are offered to allow investors and analysts additional time and detail for analyzing our financial results in advance of our quarterly and full year conference call. As previously scheduled, the conference call will begin today, March 29, at 8:30 a.m. E.T. and will include comments followed by questions and answers. These prepared remarks will not be read on the call.

The conference call may be accessed using the following information:

-Telephone: 877-618-0011 (U.S.) and 973-200-3380 (international)
- Conference ID: 591 590 81
- Live webcast: www.schange.com/IR (An archived recording will be available at this site.)

Fiscal 2012 Fourth Quarter and Full Year Financial Discussion

Revenues:

Total revenues for the fourth quarter of fiscal 2012 amounted to $51.7 million, which were $6.2 million or 10.7% lower than revenues of $57.9 million recorded in the fourth quarter of last year. From an operating segment perspective, revenues from the Company’s Software segment for the fourth quarter were $43.3 million which were $8.2 million or approximately 16% lower than revenues of $51.5 million for the fourth quarter of fiscal 2011. The primary reasons for the decrease in Software revenues quarter over quarter were due to lower service revenues, as the prior year included a $4.6 million adjustment related to the acceleration of deferred maintenance revenue from the deactivation of the VOD systems at a customer, and the Company also experienced lower VOD server shipments year over year.

The Media Services segment generated revenues for the fourth quarter of fiscal 2012 of $8.4 million which were $2.0 million or approximately 31% higher than revenues of $6.4 million in the fourth quarter of fiscal 2011. The increase in Media Services revenues in this year’s fourth quarter compared to last year was the result of recent contract wins in Latin America and Eastern Europe.

Total revenues for the full year ended 2012 amounted to $197.7 million, which were $4.0 million or 2.0% lower than revenues of $201.7 million recorded in the same prior period. From an operating segment perspective, Software revenues for the full year fiscal 2012 amounted to $164.8 million, which were $8.9 million or approximately 5.1% lower than the $173.7 million of revenues generated in fiscal 2011. The primary reasons for the decrease in Software revenues year over year were due to lower VOD server revenues and the prior year maintenance adjustment described above.

For the full year fiscal 2012, the Media Services segment generated revenues of $32.9 million which was $4.9 million or approximately 17.5% higher than revenues of $28.0 million for the same prior period. The increase in Media Services revenues for fiscal 2012 compared to last year was primarily the result of recent contract wins in Latin America and Eastern Europe as well as higher content processing revenues from customers in France and Dubai.

Gross Margin:

The Company’s total gross margin of 50.9% for the fourth quarter of fiscal 2012 was 3.6 points lower than total gross margin of 54.5% for last year’s fourth quarter. Reviewing gross margin by business segment, the Software segment gross margin for this year’s fourth quarter of 57.0% was 3.7 points lower than the gross margin of 60.7% for the fourth quarter of fiscal 2011. The decrease in Software segment gross margin was primarily the result of lower service margins due to the maintenance transaction last year, partially offset by higher advertising product margins.

Media Services gross margin of 19.2% for the fourth quarter of this year was 13.6 points higher than gross margins of 5.6% for the fourth quarter of last year. The increase in gross margin between quarters was due primarily to lower content acquisition costs.

The Company’s total gross margin for the full fiscal year was 49.6% or 1.4 points lower than total gross margin of 51.0% for the same prior period last year. Reviewing gross margin by business segment, the Software segment gross margin was flat year over year at 56.5%; however, the Media Services gross margin of 14.8% for fiscal 2012 was 2.3 points lower than gross margins of 17.1% for the same prior period. The decrease in gross margin between years was due primarily to higher headcount costs to support recent contract wins in Latin America and Eastern Europe.

Operating Expenses:

Total operating expenses for the fourth quarter of fiscal 2012 were $26.3 million or $3.4 million higher than the $22.9 million of total operating expenses incurred in the fourth quarter of last year. This year’s fourth quarter total operating expenses included $1.8 million of expenses related to estimated earn-out liabilities in connection with the VividLogic and eventIS acquisitions and $3.1 million of restructuring charges.

For fiscal 2012, total operating expenses of $97.0 million were $3.4 million lower than total operating expenses of $100.4 million for the same prior period. The decrease in total operating expenses between periods was the result of lower domestic research and development expenses due primarily to a reduction in headcount and as well as lower overall restructuring charges. These reductions were partially offset by increased general and administrative expenses related to the Company’s review of various strategic alternatives and increased earn-out related expenses as a result of the acquisitions of VividLogic and eventIS.

The management team looks forward to the earnings call on Thursday, March 29, 2012 at 8:30 a.m. E.T.

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Hadoop as a Service (as offered by handful of niche vendors now) is a cloud computing solution that makes medium and large-scale data processing accessible, easy, fast and inexpensive. In his session at Big Data Expo, Kumar Ramamurthy, Vice President and Chief Technologist, EIM & Big Data, at Virtusa, will discuss how this is achieved by eliminating the operational challenges of running Hadoop, so one can focus on business growth. The fragmented Hadoop distribution world and various PaaS solutions that provide a Hadoop flavor either make choices for customers very flexible in the name of opti...
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The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device experiences grounded in people's real needs and desires.
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Wearable devices have come of age. The primary applications of wearables so far have been "the Quantified Self" or the tracking of one's fitness and health status. We propose the evolution of wearables into social and emotional communication devices. Our BE(tm) sensor uses light to visualize the skin conductance response. Our sensors are very inexpensive and can be massively distributed to audiences or groups of any size, in order to gauge reactions to performances, video, or any kind of presentation. In her session at @ThingsExpo, Jocelyn Scheirer, CEO & Founder of Bionolux, will discuss ho...
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT.
Every day we read jaw-dropping stats on the explosion of data. We allocate significant resources to harness and better understand it. We build businesses around it. But we’ve only just begun. For big payoffs in Big Data, CIOs are turning to cognitive computing. Cognitive computing’s ability to securely extract insights, understand natural language, and get smarter each time it’s used is the next, logical step for Big Data.
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, June 9-11, 2015, at the Javits Center in New York City. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be
Container frameworks, such as Docker, provide a variety of benefits, including density of deployment across infrastructure, convenience for application developers to push updates with low operational hand-holding, and a fairly well-defined deployment workflow that can be orchestrated. Container frameworks also enable a DevOps approach to application development by cleanly separating concerns between operations and development teams. But running multi-container, multi-server apps with containers is very hard. You have to learn five new and different technologies and best practices (libswarm, sy...
SYS-CON Events announced today that DragonGlass, an enterprise search platform, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. After eleven years of designing and building custom applications, OpenCrowd has launched DragonGlass, a cloud-based platform that enables the development of search-based applications. These are a new breed of applications that utilize a search index as their backbone for data retrieval. They can easily adapt to new data sets and provide access to both structured and unstruc...
As the Internet of Things unfolds, mobile and wearable devices are blurring the line between physical and digital, integrating ever more closely with our interests, our routines, our daily lives. Contextual computing and smart, sensor-equipped spaces bring the potential to walk through a world that recognizes us and responds accordingly. We become continuous transmitters and receivers of data. In his session at @ThingsExpo, Andrew Bolwell, Director of Innovation for HP's Printing and Personal Systems Group, discussed how key attributes of mobile technology – touch input, sensors, social, and ...
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.