All year long last year, Macrovision (NASDAQ:MVSN) beat the stuffing out of Wall Street's earnings estimates. Tomorrow, the digital-media piracy fighter tries to extend its streak into the new year with yet another story of success. Will it succeed?

What analysts say:

  • Buy, sell, or waffle? A dozen analysts watch Macrovision, and buy ratings outnumber holds 11-to-1.
  • Revenues. On average, they expect to see sales rise 14% to $65 million.
  • Earnings. Profits, however, are predicted to fall 8% to $0.23 per share.

What management says:
Unsurprisingly, CEO Fred Amoroso thinks his company will indeed succeed in pushing its streak into a second year: "As we did throughout each quarter of 2006, we successfully executed Q4 and are pleased with the results. We delivered against our estimates and are confident in our ability to deliver again in 2007." Specifically, CFO James Budge is predicting $285 million or so in sales this year and pro forma earnings of approximately $1.26. In the quarter being reported tomorrow, management is guessing $63 million to $66 million in sales and $0.20 to $0.24 per share in pro forma profits. 

What management does:
Pro forma profits -- which, according to Macrovision, exclude "non-cash and one-time items such as amortization of intangibles from acquisitions, impairment on investments, equity-based compensation charges, in-process research-and-development charges, and restructuring charges, as applicable" -- have their place when analyzing a single company in isolation, I suppose. But because the company itself gets to define what is and is not relevant under the pro forma rubric, they're not so useful when comparing different companies across an industry.

For that, GAAP works better, because it allows us to make company-specific statements such as the following: "Macrovision's gross margins have been sliding for well over a year," and "rolling operating and net margins may have turned the corner last quarter." There are also comparative statements such as: "Macrovision's operating margins, while superior to those of Real Networks (NASDAQ:RNWK), pale in comparison to those of competitors Microsoft (NASDAQ:MSFT) and Digital River (NASDAQ:DRIV)."

Margins

9/05

12/05

3/06

6/06

9/06

12/06

Gross

89.1%

88.4%

87.4%

85.8%

84.7%

83.6%

Operating

24.3%

22.4%

21.3%

21.0%

21.5%

22.7%

Net

16.6%

10.9%

9.1%

8.9%

8.9%

13.3%
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:
Regulation FD strikes again. On March 6, Macrovision held a presentation for analysts at which it disclosed -- accidentally or otherwise -- specific fiscal 2006 revenue growth patterns for its Europe, Middle East, and Africa (EMEA) and Asia-Pacific regions. As required by law, within one day Macrovision had published this information on the SEC's website for all to see. There, we learn that in EMEA, the firm's revenues grew twice as quickly as in Asia-Pacific last year -- 60% versus 30%. Also worth noting is the almost complete stagnation of entertainment revenues (derived from copyright protection of movie DVDs, for example.) In EMEA, this revenue stream grew just 1% last year. In Asia-Pacific, it contracted 2%. This is remarkable in light of the growth posted in software revenues found in both regions -- 39% in EMEA, and 70% in Asia Pacific. Software protection definitely looks like the growth engine here, while DVD-sourced revenues are withering on the vine.

For further Foolish musings on Macrovision, read:

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Fool contributor Rich Smith does not own shares of any company named above.