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Technicolor grows again, delists from NYSE, has positive cash flow

Technicolor has come a long way in little more than a year, but has continued to lose scale as it exits various businesses


Published: 3 March, 2011


Technicolor has come a long way in little more than a year, but has continued to lose scale as it exits various businesses. A year ago it was a $6 billion business, slightly embarrassed that it had fallen from being an $11 billion consumer electronics giant, having exited cash intensive price sensitive markets like TV manufacture. Today it is closer to a $3.5 billion business, but has finally found its way back into growth and has its first positive free cashflow in quite a while.

The company said it now plans to delist its ADS from the New York Stock Exchange and instead rely on the NYSE Euronext, to maintain a relationship with US investors.

Quarterly revenue was €1,16 billion, a rise of 21.4% against Q4 2009, and for the year, revenues were €3,574 million, a slight fall of 1.2% against the entire of 2009 with a relatively small loss of €69 million. Today it holds debt of around €1.325 billion and cash of €367 million.

Back in February 2009, then operating as Thomson, it was in urgent need of cash to avoid debt defaults and decided to put up its Grass Valley and PRN units for sale. It took until last July for it to agree the sale of the transmitter part of Grass Valley, for just $80 million up front, and put up some of its own cash to pay for the ongoing management of the unit, selling out to private equity group Francisco Partners.

The remainder of Grass Valley, comprising its head end business, was only sold a few weeks back and now it says that it has taken PRN, the digital signage business which handles advertising in Wal-Mart stores, off the market.

At the time Technicolor was bandying around highly improbable figures for the price of a sale of these units, and has reported them as discontinued operations since early 2009. That move came as soon as a new CEO Frederic Rose came from Alcatel and took over from the exiting Frank Dangeard.

Now the company operates as three segments, Technology ($450 million), Entertainment Services ($1.7 billion) and Digital Delivery ($1.4 billion).

Technology is now heavily pushing its MediaNavi service navigation software, as well as the MediaEncore integrated access gateway and media server. The company has MediaNavi on trial at Talk Talk in the UK.

Technology also includes the set top division and while the MediaNavi technology is a newcomer, it is seen as a real hope for the future of Technicolor using a licensing model. It was first presented at CES this year, designed to simplify media consumption and act as an aggregator of operator, web and customer media. It runs on tablets and smartphones and supports Android, WebOS, Windows7, MeeGo and the iOS operating systems. It operates a set of web services in connection with not just Technicolor set tops, but also third party set tops and connected TVs and is underpinned by several Technicolor patents. Effectively this is Technicolor’s OTT video play. It also says that it has an order from a Tier one European operator for a next generation set-top box based on its new software platform, which sounds like the Snowflake MediaHighway combination that NDS has built, and will likely come to rival it once this deal is announced. The company also expects to announce its first customer for the MediaEncore solution shortly.

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