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Last Update: 18-Jul-12 09:15 ET
Rovi shares plunge over over 30% following downside guidance
Rovi (ROVI $12.25 -5.46) issued downside guidance for the second quarter with EPS of $0.35-0.38 versus the $0.57 Capital IQ consensus and revenues of $158 million versus the $182.62 million consensus. Revenues in the consumer electronics (CE) sales vertical are expected to be down approximately $21 million from the same period last year, primarily as a result of an anticipated decline in analog content protection (ACP) revenues. However, CE sales in the second quarter of 2012 were also impacted by fewer licensed CE device manufacturers than anticipated and a reduction in royalty-bearing unit sales reported by many device manufacturers. The company issued downside guidance for fiscal year 2012 with EPS of $1.60-1.90 versus the $2.51 consensus and revenues of $650-680 million versus the $765.16 million consensus. The company also says while a decline in ACP revenues was anticipated, several other factors are expected to negatively impact Rovi's business to an extent not previously expected. These factors include: Delays in adding new patent licensees in key growth areas including CE manufacturers, the TV Everywhere field of use in the U.S. and for the television field of use with service providers in Europe. While Rovi prefers not to litigate and still expects to enter into the majority of its patent licenses without litigation, the Company has, in certain instances, been unable to negotiate terms with prospective licensees that Rovi believes represent appropriate value for these licenses. The Company now believes pending patent litigation matters must progress further before certain prospective customers will finalize arrangements on terms acceptable to Rovi. Delays in launches for certain products and services, including the Rovi Entertainment Store, new DivX content creation software, DivX Plus Streaming, and DTA guides, as well as lower-than-expected results for Rovi's online properties, video advertising and commerce tools and Total Guide for CE.
