RGB Relights Its IPO Fire
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