SeaChange Closes Sale Of Broadcast And Storage Hardware Unit

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SeaChange International completed the sale of its broadcast server and storage business -- which has spun off as XOR Media -- to a private investment group after the deal cleared regulatory approvals, it announced late Thursday.

The financial terms of the deal were not disclosed. The divestiture to the investment group, led by venture-capital firm VantagePoint Capital Partners, is a core pillar of SeaChange's strategy to focus entirely on software products for video-on-demand, multiscreen video and advertising.

"This sale is an important part of our strategy to transform SeaChange into a pure-play software company," SeaChange CEO Raghu Rau said in a statement. "Now that the transaction is complete, we can focus on our core software and services operations, including our next-generation back office, video streamers, gateway software and advertising solutions."

The broadcast server and storage business that is now XOR Media generated $2.4 million in revenue for the quarter ended Jan. 31, 2012, according to SeaChange.

SeaChange is looking to slim down even further: The company is currently looking to sell its On Demand media services business, as well. Rau has said SeaChange will continue to offer VOD server hardware (known as "pumps") in order to serve existing customers but that he expects next-generation service provider deployments to comprise software running on commodity hardware platforms.

Zheng Gao, previously president of SeaChange's Storage and Servers unit, is now CEO of XOR Media, which is based in Greenville, N.H. XOR has 180 employees and more than 300 customers worldwide delivering 12,000 broadcast channels.

"XOR Media is a new business entity in name, but the same team and processes are here to ensure business continuity for our customers," Gao said in a statement.

For its full-year 2012 fiscal year ended in January, SeaChange reported total revenue of $197.7 million, down 2% year-over-year, with net loss from continuing operations of $1.3 million compared with a net profit of $31.6 million for fiscal 2011.

SeaChange as of Jan. 31 reported "goodwill" assets of $63.6 million, which excludes $594,000 of goodwill assigned based on a relative fair-value calculation to the divestiture of the broadcast servers and storage business unit, according to the company's 10-K annual filing.

As a result of the XOR Media divestiture, SeaChange in fiscal 2012 recorded an impairment charge to restructuring expenses of $138,000 for "purchased software that will no longer be used."

Meanwhile, SeaChange's media services division posted sales of $8.4 million in the quarter ended Jan. 31, up 31% year over year, with the increase the result of recent contract wins in Latin America and Eastern Europe, the company said. SeaChange acquired U.K.-based On Demand Group Ltd. in 2005. The division manages content acquisition and aggregation, as well as marketing, programming and other services, that reach more than 6.5 million households.

Rau was named SeaChange's permanent CEO effective May 1. He had taken over as interim CEO in November 2011 after the departure of founder, chairman and CEO Bill Styslinger.

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