Digital media piracy fighter Macrovision (NASDAQ:MVSN) reports Q1 2006 earnings results tomorrow after market close. Want to know what Wall Street is looking for? Read on. Want to get a better feel for the big picture? Read on a bit more.
What analysts say:
- Buy, sell, or waffle? Seven analysts watch Macrovision, with two of them rating the company a buy and the other five a hold.
- Revenues. Analysts expect to hear of anemic growth tomorrow, with sales projections calling for only a 4% gain year over year, to $53.2 million.
- Earnings. Worse, profits are expected to decline 18% to just $0.18 per share.
What management says:
In the company's February report on Q4 and full-year 2005 results, CEO Fred Amoroso pronounced himself "pleased" with the company's "record revenues." Chief Financial Officer James Budge echoed the sentiment, citing the company's "high pro forma operating margins" and expressing optimism about achieving financial targets for fiscal 2006: about $240 million in sales and $0.95 per share in pro forma (Latin for "we wish they were real") profits.
What management does:
"Pro forma operating margins?" If that's the first time you saw a C-level executive point to this strange metric as something to be proud of, there's a reason for that. Quite simply, the company doesn't have a lot of metrics to choose from that suggest it's doing well. Rolling gross margins are down 260 basis points over the last 18 months, and both rolling operating and net margins have declined by more than a third in the same time.
|
Margins % |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
91.9 |
92.1 |
91.1 |
90.2 |
90.1 |
89.3 |
|
Op. |
37.3 |
35.6 |
32.3 |
28.8 |
25.3 |
23.2 |
|
Net |
17.8 |
20.2 |
16.1 |
14 |
16.6 |
10.9 |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
So Macrovision is earning considerably less profit on its revenues now than it was a year and a half ago. What, then, about the "record" revenues? Even those aren't much to brag about, recently. Over the last six months, Macrovision's sales have declined year over year by 1%. So basically, what we have here is a company that's selling less stuff and making less money on the stuff it sells.
The picture looks similar on the cash flow statement. There, we see that Macrovision generated $19.1 million in free cash flow (FCF) over the last six months. And although it's true that this "cash profit" number eclipses the company's $10.6 million reported net income under generally accepted accounting principles, it also marks a hefty 24% year-over-year decline in FCF generation. Long story short, there's nothing much good to say about Macrovision these days. Let's hope tomorrow gives us something better to report.
Competitors:
- Altiris (NASDAQ:ATRS)
- Digital River (NASDAQ:DRIV)
- IBM (NYSE:IBM)
- Philips (NYSE:PHG)
- Microsoft (NASDAQ:MSFT)
- RealNetworks (NASDAQ:RNWK)
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Fool contributor Rich Smith does not own shares of any company named above.
