Digital River said it entered into the seventh omnibus amendment to the Microsoft Operations Digital Distribution Agreement dated Sept. 1, 2006, extending the terms through March 31, 2017. Microsoft has the option to extend the expiration date for up to four separate six month terms.
As part of their current agreement Digital River builds, hosts, and manages Microsoft's online store that sells both hardware and software.
The Internet software company also announced that it expects its merger with Siris Capital to close in the first quarter of 2015.
TheStreet Ratings team rates DIGITAL RIVER INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIGITAL RIVER INC (DRIV) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DIGITAL RIVER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIGITAL RIVER INC continued to lose money by earning -$0.57 versus -$5.61 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus -$0.57).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 133.3% when compared to the same quarter one year prior, rising from -$12.49 million to $4.15 million.
- Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that DRIV's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.96 is high and demonstrates strong liquidity.
- DRIV has underperformed the S&P 500 Index, declining 5.80% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has significantly decreased to $5.53 million or 69.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: DRIV Ratings Report