Light Reading
Amdocs is paying $275M, more than six times annual revenues, for content download system vendor Qpass

Amdocs Buys Into Content Delivery

Ray Le Maistre
4/18/2006
50%
50%

Billing systems giant Amdocs Ltd. (NYSE: DOX) is buying content download system vendor Qpass Inc. for $275 million in cash, a move that further highlights the growing importance to the telecom services world of content delivery platforms. (See Amdocs to Buy Qpass.)

Qpass is a supplier of software that enables wireless operators such as Cingular Wireless , Sprint Corp. (NYSE: S), and T-Mobile International AG to sell and deliver digital content, such as ringtones and games, to their customers. It also provides a managed service for carriers and acts as a services strategy consultant for telecom operators and content owners such as Sony Corp. (NYSE: SNE), ESPN, and HBO.

Such systems have long been important to mobile carriers, but with fixed-line operators keen to find ways of increasing revenues from their broadband customers, digital content delivery capabilities are quickly becoming relevant to a wider customer base, with VOIP specialist Skype Ltd. a recent example. Skype is using Qpass to sell "original pictures, sounds, and ringtones" as part of its new Personalise Skype service. (See Skype Launches New Version.)

The move pitches Amdocs squarely up against VeriSign Inc. (Nasdaq: VRSN), which made two acquisitions in the content delivery sector during March. (See VeriSign Acquires M-Qube and VeriSign to Buy Kontiki.)

On a conference call today, Qpass's CEO and founder, Chase Franklin, said his company's technology has enabled 480 million transactions worth $1.2 billion in total. He noted that, while ringtones still dominate the download sector, they only account for about 50 percent of current transactions handled by Qpass's technology, with games accounting for about 19 percent, graphics (such as screen savers) about 15 percent, and videos to mobile phones already accounting for about 2 percent.

Amdocs believes there's plenty more to come. The billing and CRM giant believes there is massive growth in the digital download market and reckons the market can grow from being worth $15 billion in 2005 to as much as $70 billion in 2009 as fixed and cable operators find they need such systems.

That's why it's prepared to pay more than six times revenues for Qpass, which generated $42 million in sales in 2005. That's growing though, with Amdocs saying the current quarterly run rate is at $12 million to $15 million. While the companies didn't discuss Qpass's profitability, Merrill Lynch & Co. Inc. analyst Tal "Too Tal" Liani estimates that Qpass lost between $5 million and $7 million in 2005.

The acquisition is expected to be dilutive by $0.01 or $0.02 in the current fiscal year, which ends in September, and accretive thereafter, and is expected to close before the end of June 2006. It's unclear how many of Qpass's 300 staff will be retained.

The move pleased investors, with Amdocs's share price edging up 25 cents, (8.3%), to $3.25 in pre-market trading this morning.

The deal will have also pleased Qpass investors such as Oak Investment Partners , Venrock Associates , and SeaPoint Ventures , and others, which have pumped more than $38 million into the firm.

And if there's any truth behind a recent posting on John Cook's Venture Blog, the purchase price may have been hiked up by rival bids from other interested parties, including Verisign, Openwave Systems Inc. (Nasdaq: OPWV), and Lucent Technologies Inc. (NYSE: LU).

Amdocs declined to comment on whether it had been involved in a competitive bidding process, while Qpass spokespeople were unavailable.

— Ray Le Maistre, International News Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 3:56:54 AM
re: Amdocs Buys Into Content Delivery
If it's correct that Lucent was among the other companies interested in Qpass, maybe it should have bid higher. There are surely decent margins to be had here, and Amdocs is an aggressive company that's used to winning. One to watch.
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Graham Finnie from Heavy Reading about some of the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control.
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
LRTV Interviews
Bob Wilson, Arsenal Legend: The Light Reading Interview

1|16|15   |   35:36   |   (3) comments


Arsenal goalkeeping legend Bob Wilson was Light Reading's guest interviewee at the 2020 Vision Executive Summit in December. See what the former soccer star and sports broadcaster had to say when he took to the stage in Iceland.
LRTV Custom TV
What MEF Third Network Initiative Means for SDN & NFV

1|14|15   |   6:13   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss discusses the importance of the MEF Third Network initiative and why it's good news for SDN/NFV industry initiatives.
LRTV Huawei Video Resource Center
Frank Miller: Distributed Solutions are the Best Build for the Future - Part II

1|9|15   |   2:46   |   (0) comments


At SCTE, Frank Miller, Global CTO of MSO at Huawei, speaks about Cable 2.0 and its innovative future.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Cuomo Unveils Broadband Aid Program
Alan Breznick, Cable/Video Practice Leader, 1/19/2015
FiOS Picks Up Pace Again
Alan Breznick, Cable/Video Practice Leader, 1/22/2015
BlackBerry Wants Net Neutrality Protection -- That's Just Sad
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/22/2015
Indiana Carrier Takes Fiber to the Farm
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/22/2015
Verizon Ready for Google MVNO Challenge
Dan Jones, Mobile Editor, 1/22/2015
Like Us on Facebook
Twitter Feed
Webinar Archive