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Amino Snaps Up IPTV Assets

Amino Technologies plc (London: AMO) firmed up its position as one of the leading suppliers of set-top boxes to telco TV service providers today with the acquisition of Tilgin AB 's IPTV business. (See Amino Buys Tilgin STB Unit.)

Amino is paying 30 million Swedish Kronor (US$3.6 million) for the Swedish vendor's loss-making IPTV set-top box business, which has sold and delivered 500,000 units to date. (See Tilgin Shows Off PiP.)

Amino's general manager, Roy Kirsopp, says Tilgin, previously known as I3 Micro Technology, has between 10 and 15 customers, mostly in Europe, with very little overlap between the two firms' customer bases. (See Tilgin Claims IPTV Success, Tilgin Touts STB Deal, Tilgin Notches Nordic Win, I3 Micro Becomes Tilgin.)

Kirsopp says much of Tilgin's business has come through its partnerships with Ericsson AB (Nasdaq: ERIC) and Nokia Networks -- relationships that Amino will now be able to utilize. The acquisition also adds 36 staff, based just outside Stockholm, to Amino's ranks, with most of them being engineers.

The move suits both companies. Amino's stated aim is to expand into new markets and develop new products, and Tilgin delivers that in the form of new customers, new partners, and new products. The Swedish company had a product line that Amino needed but didn't have -- a hybrid IP/DVB (Digital Video Broadcast) set-top.

For Tilgin, the sale removes an unprofitable business line from its books. In 2007, IPTV set-top box revenues reached SEK254 million ($30.7 million), but the business recorded an operating loss of SEK42 million ($5.1 million).

Then the company lost its biggest customer, Belgacom SA (Euronext: BELG), when the Belgian incumbent introduced MPEG-4 high-definition services and opted to source alternative set-top devices from Nokia Siemens. As a result, Amino notes that sales of Tilgin IPTV set-tops in 2008 are set to be "materially less" than the 146,000 shipped last year.

So Tilgin is now concentrating on its home gateway business, which is growing and profitable. As a result of the acquisition, Amino will become a sales channel for Tilgin's home gateways.

Amino, meanwhile, expects projected cost synergies (in R&D and manufacturing) and sales growth to make the acquisition profitable by the second half of 2009. And Kirsopp says the applications and software that will come with the acquisition, plus the expertise of the Tilgin development staff, will enable Amino, which recently won a Telco TV Vision Award, to bring new products to market more rapidly than originally planned. (See TelcoTV: The Vision Awards.)

Amino also hopes to be able to increase its share of the IP set-top box market as a result of the acquisition. Kirsopp says Amino held about 13 percent of the market in 2007, though that share is likely to be a bit lower this year.

The company's interim results, announced in August, show that Amino shifted 256,000 units (up 7 percent year-on-year) in the first half of 2008, during which time it generated £14.5 million ($21.5 million) in revenues and a pre-tax profit of nearly £1.1 million ($1.6 million).

The Cambridge, U.K.-based company faces stiff competition, though, from the likes of Advanced Digital Broadcast (ADB) , Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), and Sagem Télécommunications SA .

— Ray Le Maistre, International News Editor, Light Reading

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