Digital media expert Rovi
So far, so good. On that short-term basis, Rovi certainly deserves the 20% overnight share price jump it received. But zoom out a bit, and things start to get murky.
Management merely reaffirmed its full-year revenue guidance and raised the expected earnings range by just $0.05 per share, or just over 2%. The midpoint of those ranges now sits very close to existing Street estimates. So how does Rovi blow estimates out of the water in the first quarter without really changing its longer-term view?
Perhaps the original guidance was a wee bit optimistic. One good quarter with solid progress toward integrating Sonic Solutions into the mix would then be enough to simply underscore blue-eyed and rosy-cheeked hopes, thus elevating them to a serious forecast.
But don't forget that the 2011 outlook Rovi is defending here was seen as a major step down when it was first announced, three months ago. In terms of sales and earnings, the combination of Rovi and Sonic is less than the sum of its parts.
It's easy to put a positive spin on the business with a good first quarter to lean on. But Rovi simply can't afford anything less than excellence here, lest Avid Technology
That being said, the company is executing with precision right now. This week, the Sonic-developed RoxioNow platform stepped up as the basis for Google's
Will Rovi build on this early success to deliver even stronger results throughout 2011 or will hiccups in execution deal damage to the company and its stock? I haven't seen enough to bet on the optimistic side of that dividing line yet. By keeping a close eye on the company, you can come to your own conclusions on when to pull the trigger -- if ever. Our new My Watchlist service is designed to help you do exactly that. Click here to add Rovi to your watchlist -- or any other ticker worthy of more investigation.