Macrovision-Gemstar Deal Worries Analysts
"Macrovision could be the next hub for how we consume digital media. That's the dream here," said Olson, the Piper Jaffray analyst.
Olson, though, said some cable operators may create their own software, and the company will have to contend with major competitors, such as Microsoft (MSFT), which is positioning its Media Center to be the digital entertainment hub in the home.
Macrovision CFO James Budge projected a 10% to 15% growth rate for the combined company over the next five years. "Our target Ebitda margin is above 40%, and we expect to generate over $200 million in operating cash flow in 2008," which will go to pay down the debt, he said on the call.
Analysts project combined earnings before interest, taxes, depreciation and amortization of $266 million in 2008, according to Thomson Financial.Budge said the deal would create "reasonably significant" cost synergies. However, Schackart said the deal is "better suited for a private company that has the time and risk tolerance for integration." As good as the team's experience is, the integration risks loom large, Schackart wrote. "Eight out of 10 big deals do not work." He would consider reinstating his rating should Macrovision land some big movie studio contracts for bundled content protection software -- the company's traditional business line.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV