SeaChange Streamlines for Software


In a move to strengthen its focus on software,
SeaChange International has agreed to sell its declining
broadcast servers and storage business — to be renamed XOR
Media — to a group of private investors.

Terms of the deal are not being disclosed. A spokesman said
SeaChange will provide “more color” on the transaction when
it reports results for fiscal fourth-quarter 2011 and for the year
ended Jan. 31, 2012, on Thursday (March 29).

SeaChange is retaining its video-on-demand software and
related hardware business. The sale to the investment group,
led by venture-capital firm VantagePoint Capital Partners, is
expected to close after customary regulatory approvals.

The planned spinoff is not surprising, given that SeaChange
told investors last year that it was exploring “strategic alternatives”
for the Servers and Storage group. “It has been apparent
for the last year their focus was on software-based solutions
focused on multiscreen, advertising and cloud,” Broadbandtrends
analyst Teresa Mastrangelo said.

SeaChange’s Servers and Storage group has been shrinking
over the last several years. The vendor said the spinoff
will let it focus on core software and services operations
including its next-generation back-office software, VOD
streamers, gateway software and advertising solutions.

“This divestiture is an important part of our strategy
to transform SeaChange into a pure-play software company,
significantly reduce our overall cost structure, and
strengthen our ability
to compete in
delivering next-generation
video solutions, while
generating cash,”
SeaChange interim
CEO Raghu Rau said
in a statement.

Rau added that
SeaChange will continue
to resell and
support XOR Media
products: “We see
this divestiture as a
step toward a future
relationship — not the
ending of one.”

With the divestiture
of the Servers
and Storage group,
SeaChange will have
the flexibility to offer
customers hardware
from any company.
The company said
it will continue to
provide customer service and support to all of its VOD
streaming service-provider customers and also will provide
customer service and support to any customers who
purchase storage products as part of its reseller agreement
with XOR Media.

Zheng Gao, president of SeaChange’s Storage and Servers
unit, will become CEO of XOR Media.

Rau, a member of SeaChange’s board and a strategic adviser
specializing in global marketing, business strategy
and venture capital for high-technology companies, took
over CEO duties in November 2011 after SeaChange founder,
chairman and CEO Bill Styslinger left the company.

Other execs have departed SeaChange since then, including
president Yvette Kanouff — now Cablevision Systems’
executive vice president of engineering for software
design — and chief financial offi cer Kevin Bisson.