Rovi Q4 Sales Down 10%

Renewed IPG Deals With 32 MSOs in the Period, With Service Provider Sales Up 4%

Rovi boosted service provider revenue 4% in the fourth quarter of 2012 -- and renewed interactive program guide deals with 32 cable operators in North America in the period -- but overall sales fell 10% because of declines in the company’s consumer-electronics businesses.

Rovi’s total Q4 revenues were $157 million, down $17.3 million from the year-earlier period. It posted net income of $2.1 million, compared with a net loss of $49.3 million in the year-earlier period.

The company said its CE Discovery and Advertising segment was down $5.2 million, or 13% from Q4 2011, while CE Video Delivery and Display was down $15 million or 37% from Q4 2011. Service provider revenue for the fourth quarter was $81.4 million, up from $78.1 million a year prior, with Rovi attributing the increase primarily to subscriber growth.

Rovi's stock climbed 3.8% in early trading Thursday, to $17.90 per share, after the company reported results after market close Wednesday.

On the service provider front, Rovi now has 11 cable operators that have signed up for the next-generation TotalGuide set-top box IPG and/or TotalGuide XD guides for tablets -- products that have met with significant delays.

Rovi now expects six of those MSOs to begin deployments in the first half of 2013, and Rovi anticipates booking revenue from the TotalGuide deployments in the latter half of the year, president and CEO Tom Carson said on a conference call with analysts Wednesday.

“A big part of what we’re doing today is actually starting to roll out into the service providers that we’ve identified, whether it’s for TotalGuide for set-top box or the tablet application which is XD, and we’re kind of in that mode of doing the initial deployments and testing, whether it’s in a lab environment or a field environment,” Carson said.

Asked about the implications for Rovi of Intel’s plans to introduce an over-the-top TV service this year, Carson said, “Generally speaking what we typically say is that for us it comes down to is somebody going to use our product or is somebody going to use and pay for our intellectual property? So that’s really what it boils down to for us.”

More broadly, Carson said Rovi is bullish on the shift to IP video delivery and TV Everywhere. “The proliferation of consumer-electronics devices and changing viewing habits show providers are looking for ways to expand their service offerings to stay competitive while also managing their capital investments,” he said.

In January, Rovi announced plans to divest its Rovi Entertainment Store business, which among other services powers Best Buy’s CinemaNow online movie download site. The company adjusted all results for 2011 and 2012 to reflect the reclassification of the Rovi Entertainment Store business as discontinued operations.

For the full-year 2012, Rovi reported revenue of $650.6 million (down 4.5%) and a net loss of $34.3 million (versus a net loss of $41.3 million in 2011). Carson noted that in 2012, Rovi removed more than $25 million in annualized costs through “product rationalizations and targeted cost reductions.”

During the fourth quarter of 2012, Rovi reached patent settlements with Philips and Vizio, with 10 total patent renewals or license agreements in Q4 and 69 for the full year of 2012. The company also “made some good early progress in 2013 in reaching a settlement with Mitsubishi,” Carson added.

In the second quarter of 2013, Rovi’s patent litigation proceedings are scheduled to begin against LG Electronics in the U.S. in front of the International Trade Commission as well as with TP Vision in Germany.