C-COR Acquires nCUBE

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The anticipated shakeout in the video-on-demand-server business has begun with C-COR Inc. announcing its $89.5 million purchase of nCUBE Corp.

C-COR executives positioned the transaction as much as a software deal as a server deal.

nCUBE will be folded into C-COR’s software business unit, with nCUBE president Michael Pohl assuming duties for that unit.

“The strategic play is really on the software side,” C-COR chief technology officer Ken Wright said. “That’s really where we’ve had our sights set and an area where there is a great need in the operator world.”

C-COR is putting up a combination of cash, convertible notes and stock valued at $89.5 million.

The company will still sell and support VOD servers, as well as nCUBE’s ad business, Wright said. But the software was the key. “nCUBE has built the most powerful content-on-demand back-office system out there,” he added. “They really have a best-of-breed solution.”

Wright said operators increasingly want to separate the software functions of VOD -- asset management, session management, rights management, billing and reporting -- from the actual server. Those functions “become stand-alone functionalities going forward. Each functionality is critical, and operators want to be able to buy them in a modular fashion,” he added.

C-COR reported first-quarter revenues ending Sept. 24 of $62.1 million compared with $56.8 million in the year-earlier period. But charges associated with its purchase of Optinel Systems Inc. and Stargus Inc. caused the company to post a $1 million net loss, versus net income of $4.8 million in the year earlier period.

CEO Dave Woodle expects sales to fall between $62 million-$66 million in C-COR's next quarter.

Woodle said nCUBE should deliver $50 million in sales in the next fiscal year to C-COR, given the fact that it was delivering about $40 million in revenue as a private company. nCUBE operates in 100 markets and serves 3.5 million digital subscribers with 300,000 VOD streams.

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