Tandberg's troubled third quarter ends surprisingly upbeat

Three week turnaround

Tandberg Television finished what was supposed to be a troubled third quarter delivered revenues of $80.7m in 3Q06, up nine per cent compared to $74.4m in 3Q05.

Three week's earlier it has warned that its revenues would be a full 20 per cent under expectations, due to losing out on two deals unexpectedly, so it would register revenues around $80m instead of $100m, with profit of just $7m, instead of $20m.

At the time we speculated that the lost deals included the provision of Deutsche Telekom's head end technology for its nationwide rollout of IPTV, but the company said this particular loss had been known about for some time.

In the event Tandberg managed an operating profit of $9.2m, down from $15.1m in the same quarter last year. Pre-tax profit before associate company results was $9.3m, but Tandberg also recognised a one-off net gain of $7.1m from the sale and writedown of associate companies, taking full pre-tax profits to $16.4m.

The company, despite going on a mostly share based spending spree of late, has cash balances of $124.4m and added to that pile in the quarter, so things can't be too amiss.

Net cash inflow in the quarter was $28.7m after cash received for the disposal of Tandberg's minority holding in GoldPocket Wireless and the completion of the acquisition of Zetools.

Tandberg has now launched its second generation H.264 High Definition encoder which it says will provide bandwidth improvements of up to 50 per cent over its current system.

It also said it secured a number of contracts in direct to home satellite and that momentum in the high definition TV market remains strong. It named deals with Telenor, MyNetworkTVand CanalSat as well as Croatia's T-Com, Latin America's IPTV Americas and America's Horizon Chillicothe Telephone in the IPTV market.

To be fair to Tandberg, the hold up in HD set tops will have slowed its business artificially and it may well be positioned to pick up a lot of encoder business now that the chips for those systems are being shipped, which should be true of all HD encoder suppliers.

Copyright © 2006, Faultline

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