Last night, e-commerce support specialist DigitalRiver
Moving past that slightly disturbing oddity, part of the sales improvement came by way of acquisition, with the Commerce5 stock-swap buyout in last year's fourth quarter bringing substantial customers on board, including Hewlett-Packard
The company has been running other companies' e-commerce websites and download solutions for about a decade now, and has gotten quite good at it. So good, in fact, that industry heavyweights Symantec
"Our ability to execute on our business objectives contributed to our solid third-quarter financial performance and strong cash flows," said CEO Joel Ronning. "We believe we are well-positioned to capitalize on growth opportunities before us in 2007."
And the company's capital structure is well-suited to rapid expansion, with low debt, hardly any receivables, and costs pushed into the future by way of a large accounts payable line item. Digital River likes to buy smaller competitors to get access to their customers, and the company likes to do so entirely in stock. Fellow Fool Rich Duprey noted the shareholder-unfriendliness of this practice back in the spring, but thought the company's opportunities outweighed the downsides.
If you read my takedown of Sun Microsystems
Management hinted at more large deals to be announced over the next few months, though nothing as big as the Microsoft contract. It's taking its software expertise and moving into the consumer electronics field now, giving us a chance to speculate who the new partners might be -- Samsung? Philips?Toshiba? Only time will tell. But when the news comes, it should be good.
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