Video hardware

RGB Relights Its IPO Fire

When a privately held company starts sharing financial information, that's typically an indication that things are clicking.

RGB Networks Inc. , a digital video firm that still has aspirations to go public, is claiming that it had a record 2010, citing a 60 percent increase in shipments over the previous year. And it claims it was profitable as it hit the US$200 million mark in products shipped since its 2001 inception. Total revenues would actually be somewhat smaller because deferred shipments wouldn't factor in. RGB announced it crossed the $100 million mark in shipments in April 2009, so it has shipped as much product (in value) in the past 20 months as in its first eight years of trading.

But what about that IPO the company keeps hinting at? "I think we can get out this year," says RGB Chairman and CEO Jef Graham. (See CxO Download: Jef Graham of RGB Networks.)

But then again... "Whether we do will depend on the markets," he adds. So maybe not, then. (See RGB Still Gunning for an IPO .)

Any move towards an IPO won't happen any time soon, as Graham admits the company hasn't yet locked down any bank partners it would need to list its stock. Still, he wants the company to be "IPO-able" by the fourth quarter.

Graham's ongoing caution is perhaps understandable. IPOs by digital video companies in recent years have been less than stellar. The struggles of BigBand Networks Inc. (Nasdaq: BBND), which competes with RGB in some areas, represent Exhibit 1A. (See BigBand Hits a Sour Note .)

But Graham bristles at any comparison between his company and BigBand. He sees RGB's business model and approach more akin to companies such as Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (NYSE: JNPR), Adtran Inc. (Nasdaq: ADTN) and Calix Inc. (NYSE: CALX). (See Calix Files for an IPO.)

A company the size of Cisco, of course, dwarfs RGB, but his point is that he's trying to ensure his company is diverse in product and customers, and avoids becoming a one-trick pony that relies too heavily on one industry and a couple of key customers.

Graham, a former Juniper executive, claims RGB has just one customer representing more than 10 percent of revenues. But cable still represents about 70 percent of RGB's business. Graham hopes to reduce that to 60 percent this year, with telcos taking up the rest.

In geographic terms, 25 percent of RGB's business came from outside the US in 2010: Graham hopes international customers will account for 40 percent of sales in 2011.

Banking on TV Everywhere
Graham expects the bulk of that anticipated international growth to hinge on RGB's ability to sell the Video Multiprocessing Gateway (VMG), a chassis-based processor that can transcode a video source into multiple streams formatted for set-tops, PCs, mobile phones, tablets and other devices that will live in the new TV Everywhere world (if service providers can actually obtain the rights to pull it off). (See RGB's TV Everywhere Offer: A Video God Box and Comcast, Networks Spar Over iPad App .)

Graham says a number of service providers are already testing the VMG, which faces competition from smaller-footprint, more software-focused transcoding devices from companies such as Envivio Inc. (NASDAQ: ENVI), Harmonic Inc. (Nasdaq: HLIT) and Inlet Technologies Inc. While US operators are focused on ways to replicate the TV experience on PCs, RGB's European customers tend to be more focused on doing the same on smart phones.

"They all want to go to three screens; it's a case of priority," Graham says. "Next year it [the VMG] will be at least half my revenue, or maybe more."

For now, RGB's top seller is its family of Broadcast Network Processor (BNP) products, which handle more traditional digital cable functions such as video statmuxing and grooming.

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 5:15:30 PM
re: RGB Relights Its IPO Fire

Their statement suggests that they think they'll get their fair share of that market, but even they acknowledge what they've gotten so far is of the trial variety, with hints that they may be able to name names later this year.  But agree that scale of the near-term market will be limited depending on what rights operators can get to bring content to multiple screens. JB


ycurrent 12/5/2012 | 5:15:30 PM
re: RGB Relights Its IPO Fire

Like the fact that BigBand's ads are displayed along side the RGB article!  Although I noticed the ad appears across the LR site as well.  Almost credited their marketing/PR strategy.

ycurrent 12/5/2012 | 5:15:30 PM
re: RGB Relights Its IPO Fire

The VMG is well positioned for MPEG-2 to MPEG-4 type transcoding, and it will get its share of business in this area, where considerable processing power is required. I don't doubt that VMG will be half of RGB's revenue.

But how much traction will the VMG's transcoder module get and when?  This depends on the scale of TV Everywhere implementations and how broad the content catalogues will be.  If operators are limited in the content they can transcode and deliver to multiple screens (i.e., how much content can you get with U-verse Mobile), then the need for the VMG's transcoder module may be limited.  Under those circumstances, 1 RU software transcoding solutions will remain strongly competitive.

Pete Baldwin 12/5/2012 | 5:15:27 PM
re: RGB Relights Its IPO Fire

Pretty funny, ycurrent! Yes, as far as I know, the ads appear randomly, so you get some interesting pairings with articles sometimes.

viola 12/5/2012 | 5:15:27 PM
re: RGB Relights Its IPO Fire

Yeah - As if that is the first time they said that. Heard this news repeatedy for last 3 years.

This time it seems to be in response to there closest competitor BigBand's latest news yesterday announcing there nth round of cuts and posturing that RGB is doing well and it is there competitor that is faltering.

Fact remains that the market RGB is in is very limited and dominated by big dogs like Cisco, Tandberg/Ericsson, Motorola, Harmonic, Arris and last but not the least BigBand. After multiple layoffs and cost cuttings, if RGB thinks it is doing well by squeezing out a profit on a meagre revenue, then it could only be fooling itself or trying to fool someone else into buying them. 

Jeff Baumgartner 12/5/2012 | 5:15:26 PM
re: RGB Relights Its IPO Fire

I hear that. But they really, really, REALLY mean it this time. Or not. They still hedged a bit.

To be fair, the timing with the BBND announcement was a pure coincidence... we got pitched on it before the BBND news even broke.

But if they ever really do IPO, it will be fun to dig into that SEC filing and get a much more detailed view of RGB's business. Of course, if they're dolling themselves up for a sale, then they may need to get it done while the gettin's good. 

 Cedar Point apparently made that mistake years ago and tried to hold out for more back when Moto, Sonus and others were poking around ... now look what they reportedly got from Genband. JB



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