"An apparent lack of transparency on 4Q tax credit issues and forward operating costs related to its MainConcept acquisition (leading to a very large EPS guidance miss) leave us questioning whether DivX management credibility has taken a step backward. That, coupled with our view that DivX may be more of a transition (due to end-market demand) rather than a growth story in 2008, lead us to downgrade shares to Source of Funds with an $8 price target...The company realized a one-time valuation allowance for both R&D/foreign tax credits which led to a $0.13 EPS benefit in the quarter. Given th...
3/12 - "The notion of 2008 as a transition year is clearly disappointing and will push the shares to new lows. However, the resulting valuation creates opportunity for the patient...We are reducing our 2008 estimates from $99.5M/$0.65 to $100.0M/$0.50 with the drop in EPS reflecting slower growth in Technology Licensing revenue (and better results in Media Distribution) and margin pressure from increased R&D spending."
"Given the economy, some caution is warranted but, in our view, the DivX story is far better than the current stock price reflects. We believe recent wins in Blu-ray (Philli...
3/12 - "We continue to believe that DIVX has an attractive licensing business model with the potential to tap into online video distribution. However, DIVX also has a transition period ahead of it, and trading at 21.2x C08E EPS vs. peers at 18.0x, we reiterate our Market Perform rating."
"As we had anticipated, DIVX offered a light outlook for 2008 revenues. We see this as a combination of a more difficult macro environment, coupled with a maturing market for DVD players, as well as penetration for DivX Certification potentially reaching a plateau (now at 41% of DVD players worldwide)...Ma...
If you've watched videos online, many uploaded files use DIVX technology to compress the file for quicker transfer yet still try to maintain the quality of the video. Almost 12% of the float is sold short..... so there are a lot of bears on this stock. It is currently trading at $15.28. But DIVX is a small and profitable company with high ROE with virtually no debt and 156 million in cash. -
Most of the company's value potential is in the on demand video space, and it's not reflected fully in the P&L yet. So I am not really concerned about PE or if the company meets its earnings target or not. Yes, MSFT and apple is in the space, but I think there's a space for open source based solution like DivX. I think the stock looks cheap, but of course I could be wrong and the stock keeps getting battered. If it really gets cheap, I think the company makes a good takeover target. I see device makers/consumer electronics, Google, or even cable/broadband/cell technology operators, or ...
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About DivX Inc.
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