Texas Instruments reported one of the worst quarters in its history and said it would lay off 3,400 people, or 12% of its workforce, as it adjusts to the handset downturn and its newly refocused business. TI said it did not expect improvement in its fortunes during the first half of 2009 or longer, and given the likelihood of a decline in handset sales of about 10%, plus current inventory correction and a consumer spending squeeze, the cuts look very sensible, but will cost it $300 million and bring $700 million in savings. First quarter revenue will anywhere between $1.6 billion to $2.1 billion, a huge margin of error which shows how uncertain times are, and will perhaps yield a loss. There were rumors that Broadcom wanted to buy TI’s baseband cellular radio business, but it has since pulled it off the market.
Comcast Spotlight, the advertising sales division of Comcast will sell advertising for the Dish Network’s regional sports feeds in Boston, Detroit, Chicago, San Francisco, Denver, Atlanta and Houston. It’s not uncommon for fierce rivals in pay TV to merge advertising sales costs around the world, and this will allow a single point of sale for advertising in baseball, basketball and ice hockey in these regions. Spotlight has 1500 account executives operating in pay TV advertising markets.
UK’s digital terrestrial DVB-T service, Freeview, which goes out to 17 million UK homes, is now being viewed on 900,000 Freeiew+ DVRs, a rise of 118% last year. The + sign is used because pay TV rival BSkyB calls its DVR Sky+ (pronounced Sky Plus). The take up rate has accelerated dramatically in the last quarter of 2008, and during November, Freeview+ featured in its first television advertising campaign, increasing sales by 150% year-on-year. The Freeview EPG is integrated into the DVRs and this probably makes the service the largest DVR population on a free service in Europe. The market is supported by products from Daewoo, Humax, TVonics, Sharp, Wharfedale, Panasonic, Hitachi, Goodmans and Thomson at prices between £80 ($113) and £230 ($325) with varying capabilities.
Digital radio is perhaps the market which the public is least aware of out of all digital markets and although the long serving European Digital Audio Broadcast (DAB) service is well established in the UK, new digital radio sales have just fallen. The Digital Radio Development Bureau says that only 510,000 DAB radios were sold in December down from 550,000 a year ago. Total annual sales were just over 2 million, short of a 2.6 million target. Cumulatively this means there are only 8.5 million DAB radios in the UK. Analog radios sales also fell.
Only the British could end up with the biggest cellular operator in the world in Vodafone, but have an incumbent telco which has no cellular arm in British Telecom (BT). BT managed to sell its original cellular operation Cellnet, which became O2 and got bought by Spain’s Telefonica. BT has been trying to do something about it for years, and there are now rumors surfacing about BT tying up with the two weakest UK cellular operators T-Mobile and 3 UK in a potential three-way joint venture. BT already has an MVNO deal with Vodafone, but this is mostly for enterprise customers. We assume that if this comes to fruition it will be behind a BT branded service, and it could replace both the not so cozy relationship with Vodafone, and also prevent BT from having to bid for more wireless spectrum.
Spanish DTH pay TV operator Sogecable has run into trouble with its own competition authority, the Competition National Commission (CNC), for trying to tie up exclusive deals with local mobile operators Orange and Vodafone, according to Advanced Television. While its unclear what the exact problem is, given that the complainant is Mediapro, its arch-rival and that nearly all of their previous complaints have related to which of the two holds football rights in the country, we’d guess that Sogecable is selling on channels which show soccer games belonging to Mediapro. Other cable companies have joined the dispute and a court last week has just resolved another dispute telling Sogecable that it cannot insist on its services being sold with its own set tops, but must open up the market for other suppliers. In 2007 Sogecable was prevented from doing a deal with Telefonica to jointly sell a triple play service by the competition authorities.
Nokia has acquired bit-side GmbH this week in an assets sale which it says will strengthen and accelerate development in Nokia Maps. Bit-side says that it provides routing and navigation at an accelerated speed and has been working with Nokia since 2007. The deal will be completed in the first quarter when the 39 staff will join Nokia, but no financial details were given.
The founder of Marvel Comics Stan Lee, plus his own company, Marvel itself and its current CEO are all being sued for $750 million, by investors who bought shares in Stan Lee Media, which they believed had the license rights to films like Spider-Man, X-Men and Iron Man. Lee previously sued Marvel over profits made by characters created when he was the main shareholder in Marvel and cut a deal which gave him some of the profits. The shareholders were led to believe they had bought shares in all claims that Lee had. Both Lee and Marvel deny what they call ridiculous claims.
The news that China has indeed been lax in cracking down on piracy, which has brought the country a rap across the knuckles from the World Trade Organization this week, means very little right now. China says it’s sorry, the US is still jumping up and down saying ‘I was right,’ as the WTO has now proven that China ignores DVD pirates and even lets impounded merchandise back on the market instead of destroying it. The WTO has urged China to police its borders to prevent imports of counterfeit goods, and to crack down on pirates when it catches them. And while China has said that it will work with the WTO to fix everything, nothing is likely to happen until China has an even stronger studio business than it has today, and local companies find that their product is being pirated.
A stray statement by the eBay CEO to investors about Skype being a great standalone company, is now being construed as a hint that the VoIP company is about to be sold, whether that is a spin out to investors, or an out right sale or a management buy-out, eBay watchers are unsure. When questioned management has told US newspapers that there remains little synergy between Skype and the rest of the eBay business. But clearly under the current market conditions it will never get back the close to $3 billion price tag that Skype cost the company, and given that it’s no trouble to run it, we don’t suppose that Skype is going anywhere soon.
Apple’s first quarter’s figures just missed our last issue, with revenue at an all time high of $10.17 billion and net profit at $1.61 billion, just above the last figure, it shows that Apple sales are still flying high. Mac sales were up 9% to 2.5 million, iPods were up 3% to 22.7 million and iPhone sales were 4.4 million, substantially down on its first 3G quarter, when it also filled out a lot of operator inventory, which operators have been keen to clear out this quarter. Apple is still opening new markets up, and while the next quarter may fall back further, because it doesn’t have Christmas in it, the product is still clearly very strong.
TDF, which is one of the strongest transmission businesses in Europe is trying to break the impasse between broadcasting interests and the cellular community in French mobile TV, and will propose that it takes on the costs of building out DVB-H services in France, but targeting a smaller area than was originally planned. Given that the regulator used the specifications for the license from a specially formed mobile TV corporation, it shouldn’t have too much trouble changing it. TDF will also take on some of the transmission costs but will just cover Paris and five other cities instead of the 15 cities initially required by the license. But even if this is agreed, the earliest that broadcasting could start is next year ‘ three years after France had hoped to launch DVB-H services.
Video chip specialist Zoran Corporation revenues slumped in the fourth quarter to $74.7 million, from $126.1 million last quarter and $129.4 million for the fourth quarter of 2007. It lost $20 million in the process, and although this compares well with a net loss of $154.2 million last quarter it’s not so good when seen against the net income of $58.7 million a year ago. The company highlighted the fact that its digital TV revenue grew 59% and its mobile phone processors increased by almost five times. Somehow it generated $26 million in cash from operations during the quarter, and it has $396 million in the bank, but expects next quarter’s revenue to be just $50
million to $55 million.
Just as we went to press Qualcomm came in with its first quarter results, at the high end of its guidance figures, with revenues of $2.5 billion, up 3% on last year, but down 25% sequentially. Net income was $341 million, down 56% on last year and down 61% sequentially. Qualcomm generated $3.5 billion in cash during the quarter, with $2.5 billion of that from its settlement with Nokia, and sits with $13 billion in cash and marketable securities and no debt. Paul Jacobs CEO said subscribers were still happily migrating from second to third-generation CDMA networks. He expects continued growth in the CDMA device market, but has lowered his shipment estimate for 2009.