Fourth-quarter earnings from Macrovision
What Fools say:
Here's how Macrovision's CAPS score rates against some of its peers and competitors:
Market Cap (millions) |
Trailing P/E Ratio |
CAPS Rating |
|
---|---|---|---|
Microsoft |
$303,408 |
18.6 |
*** |
Adobe Systems |
$19,726 |
28.7 |
**** |
Dolby Laboratories |
$4,739 |
32.7 |
***** |
Macrovision |
$893 |
23.0 |
**** |
RealNetworks |
$847 |
11.9 |
** |
"As long as content providers want to get compensated for making their products available, rights management will be an on-going concern," says one bullish CAPS player. "MVSN is at the forefront of solutions for all of the various digital distribution routes. As these channels develop, MVSN's profits will increase."
But a recent bearish commentator explains that "From an end-user's perspective, DRM is an anti-feature. Customers will reject DRM in the long run." That's not even a new or unusual sentiment. Hold that thought.
What management does:
Not much to complain about here: Net margins are on an upward trajectory, on steadily growing sales. Free cash flow is dependably larger than the GAAP bottom line. It's all good stuff.
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
9/2007 |
|
---|---|---|---|---|---|---|
Gross |
85.4% |
84.1% |
82.9% |
82% |
81.7% |
83.2% |
Operating |
16% |
14.4% |
13.8% |
13% |
12.1% |
17.7% |
Net |
8.9% |
8.9% |
13.3% |
14.2% |
12.6% |
14.2% |
FCF/Revenue |
26.9% |
28.8% |
30.6% |
30.6% |
29.9% |
28.5% |
Y-O-Y Growth |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
9/2007 |
---|---|---|---|---|---|---|
Revenue |
9.2% |
16.2% |
21.8% |
22.4% |
14.2% |
16.5% |
Earnings |
(30.8%) |
(37.4%) |
49.4% |
89.7% |
61.4% |
85.8% |
One Fool says:
So now, let me launch into the bad stuff.
Macrovision's core competency lies in digital rights management (DRM technology), which I think is a temporarily necessary evil. Entertainment producers are clinging to that crutch for now, but they must kill it before moving on to the next stage in the industry's development: scads of consumer-centric choice.
In the short term, however, DRM solutions will probably serve Macrovision well. And the company seems to be gearing up for a wholesale business shift by shooting tendrils into related sectors like information management and software installation solutions. If and when the likes of Disney
Here's what I'd do. Wait for the first couple of studios to announce that DRM is going the way of the dodo, watch Macrovision's stock drop to infinitesimal levels, then do your checks to see whether there's any meat left on these bones. Until then, though, this Fool is staying away.