Light Reading

Synacor CEO Quits as Financials Plunge

Alan Breznick
3/6/2014
50%
50%

Synacor's stock price sank as much as 10% Thursday before recovering a bit. The company reported disappointing earnings for the fourth quarter and the full year, and its longtime chief executive, Ron Frankel, abruptly announced that he would resign.

Synacor Inc. -- which provides TV Everywhere authentication technology and web portals to a such large and midsized cable operators and telcos as Verizon Communications Inc. (NYSE: VZ), Charter Communications Inc. , CenturyLink Inc. (NYSE: CTL), Suddenlink Communications , and WideOpenWest Holdings LLC (WOW) -- reported that its net income for the quarter dropped 75% from a year earlier to $200,000. The vendor's revenue fell 8.7% to $29.4 million as its main sector, search and display advertising, came in $3.1 million lower than it did a year earlier. (See Synacor & Mediacom Extend Deal.)

The Buffalo, N.Y., company took an even bigger financial hit on its annual results. It reported a net loss of $1.4 million for the year, versus a profit of $3.8 million in 2012. Revenue slipped 8.4% to $111.8 million, due to an $11 million shortfall in search and display ad revenue.

Curiously, on an earnings call with financial analysts late Wednesday, Synacor executives did not provide much insight into the causes of the disappointing financial results beyond a little discussion about how changes in Microsoft Corp. (Nasdaq: MSFT)'s Windows 8 operating system affected its search business. Nor, surprisingly, did analysts press the executives all that much on the reasons for the quarterly and yearly declines.

Instead, Synacor officials highlighted metrics where the company did make progress, such as subscription-based products. They also spelled out some initiatives meant to boost the company's fortunes in 2014 and beyond, including a next-gen TV Everywhere search and discovery platform, an enhanced Cloud ID authentication program, a personalized service for Android devices, and more personalized web portal start pages.

"I think we have some fantastic new products, and our customers are demanding those products," Frankel said on the call. "And we just need to launch them, get them out in the marketplace… Our pace of launching the new products is a key question."

However, in a telling note, the CEO announced his resignation several minutes later. Frankel, who has run Synacor since 2001 and has steered it through several acquisitions (along with an IPO two years ago), said he will step down once the company finds a successor. He did not say why he was resigning.

Frankel, who will remain on the Synacor board of directors and become an adviser to the company, said he expects the search for his replacement to take at least 4-6 months. "It's a little hard to say" how long it will take. "I mean, we just kicked it off."

Analysts questioned whether Synacor, which has been bulking up through acquisitions over the past few years, might now put itself up for sale. Executives said that, even though a sale could always be an option, it's far more likely that Synacor will remain a buyer. (See Synacor Acquires Teknision.)

"We continue to regularly look at acquisitions," said CFO Bill Stuart. "You will probably see some activity on our part over the course of this year as a buyer," assuming the right opportunities are available.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
3/11/2014 | 10:19:58 PM
Re: Too bad
Yep, Craig. That's true.  Synacor did, and still does, seem well positioned. Just seems another video tech company caught in the crosswinds of cable change right now. I wonder what Ron will do next.  
albreznick
50%
50%
albreznick,
User Rank: Blogger
3/11/2014 | 10:17:52 PM
Re: Satisfactory answer?
I agree. Mitch. I thought the analysts should have presed Synacor officialsmore as well. Not sure why they didn't.
craigleddy
50%
50%
craigleddy,
User Rank: Blogger
3/7/2014 | 10:51:43 AM
Too bad
Sorry to hear this. Synacor has good people and seems to be in the right place, but execution and integration with cable tech is never easy. Ron worked hard to build this company and I wish him good luck. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/6/2014 | 7:17:44 PM
Satisfactory answer?
If I were an investor on that call, I'd want to hear more about what Synacor was doing to fix its problems and not about what went well. Although perhaps the CEO's resignation answered that question. 
Flash Poll
From The Founder
Anshul Sadana answers questions from Steve Saunders, Light Reading's founder and CEO, about Arista's CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Between the CEOs
Video Exclusive With Basil Alwan, Alcatel-Lucent

7|24|15   |   26:44   |   (5) comments


Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
LRTV Custom TV
VDF: Enable the Financial With Mobile Money

7|20|15   |   06:53   |   (0) comments


Ian Ravenscroft discusses how operators can expand to occupy the entire digital services value chain through service innovation.
LRTV Custom TV
Telefónica on OSS Transformation

7|20|15   |   06:01   |   (0) comments


Jose Gonzales discusses the details of Telefónica's operation transformation program.
LRTV Custom TV
Judi Achmadi on Huawei's Cloud Storage Solution

7|20|15   |   03:33   |   (0) comments


Judi discusses the key business goals of TelekomSigma's public cloud service and how Huawei's solution helps them address challenges.
LRTV Custom TV
KPN Enlightening Digital Business & IT Transformation

7|20|15   |   06:19   |   (0) comments


Rob de Beer discusses the changes that operators need to make with service innovation now coming from the Internet world.
LRTV Custom TV
Stratus Telco-Grade Cloud Solutions & NFV

7|20|15   |   07:34   |   (0) comments


Ali Kafel from Stratus Technologies addresses high-availability concerns within the telco industry with a solution that enables telcos to provide high-availability and stateful fault-tolerance using a software-based approach.
LRTV Documentaries
The Six Million Dollar Business Man

7|20|15   |   01:52   |   (0) comments


Steve Saunders, publisher. A man barely alive after an acquisition malfunction imploded the company he founded. Gentlemen, we can rebuild Light Reading. Better, faster, stronger.
Between the CEOs
CEO Chat With Anukool Lakhina, Guavus

7|20|15   |   38:51   |   (1) comment


Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
LRTV Custom TV
IBM's Flash Storage With Intel QuickAssist

7|20|15   |   03:18   |   (0) comments


Intel's Bev Crair and IBM's Eric Herzog discuss how IBM's V9000 Flash Storage System has helped customers around the world. Featuring real-time compression powered by Intel QuickAssist Technology, the V9000 is a next-gen flash storage solution.
LRTV Huawei Video Resource Center
Thailand's AIS: Transforming to an FMC Operator

7|17|15   |   4:53   |   (0) comments


Saran Phaloprakarn, Senior VP of Fixed Broadband Business Management of Thailand's AIS, was a keynote speaker at the first Asia-Pacific Ultra Broadband Summit in Bangkok. In this video, he talks to Heavy Reading about transforming into an FMC (FBB+MBB+Content) operator.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Network operators start seeing savings from NFV in the first year, according to a study by Affirmed Networks and ACG.
Hot Topics
Robbins Succeeds Chambers as Cisco Changes CEOs
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/27/2015
Cable Feuds With Senate Dems Over STBs
Alan Breznick, Cable/Video Practice Leader, 7/31/2015
RJio to Launch Its Own 4G Devices Brand
Gagandeep Kaur, Contributing Editor, 7/27/2015
Easing the Tech Pains for the Homeless
Carol Wilson, Editor-at-large, 7/28/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
Cats with Phones
Comes With Free Phone Stand Click Here
Who says cats don't have any skills?