Color Flows Back Into Technicolor's Cheeks

4:30 AM -- With its perilous financial situation now seemingly under control, French video technology specialist Technicolor (Euronext Paris: TCH; NYSE: TCH) (formerly Thomson SA) is no longer just in defensive mode.

The company, best known in service provider circles for its home gateways, set-top boxes and IPTV platform, has had a busy few days, announcing an investment in a video startup, appointing a former Alcatel-Lucent (NYSE: ALU) executive to a senior post and unveiling first-quarter financials that are heading in the right direction.

The startup is video management software firm Digitalsmiths Corp. , the video management software firm that has made a name for itself in the content indexing and search niche. Technicolor led a US$12.5 million round that included top-up funds from previous investors .406 Ventures, Aurora Funds , Chrysalis Ventures, Capitol Broadcasting and Cisco Systems Inc. (Nasdaq: CSCO) (See Digitalsmiths Raises $12.5M and Cisco Invests in Digitalsmiths .)

That's an interesting move: While $12.5 million isn't a lot of money, Technicolor is hardly known as a speculative investor in startups. CEO Frédéric Rose and his team clearly like what they see at Digitalsmiths and certainly see value in developing different ways to store, identify and deliver various forms of digital content. (See Technicolor, NetApp Team on Media Storage.)

The appointment is of former AlcaLu network infrastructure Senior Executive Michel Rahier, who joins Technicolor as executive vice president, operations services & transformation. Rahier, who was replaced at AlcaLu last year as part of Ben Verwaayen's management team revamp, has been hired to "ensure a strong focus on operational performance in order to achieve sustainable and profitable growth." Rose knows what he is getting by hiring Rahier as the pair were senior management team colleagues at AlcaLu. (See Rahier Joins Technicolor, AlcaLu Exit Door Swings Again and Thomson Nabs AlcaLu Exec for CEO Role.)

And today, Technicolor announced that its first-quarter revenues were up by more than 15 percent year-on-year at €812 million ($1.2 billion). The vendor's share price was down by less than 1 percent to €5.18 in early trading on the Paris exchange. (See Technicolor Reports Q1.)

While it's good news that revenues are going up, costs still need to come down at Technicolor, which has been cutting back and selling off during the past year or so. (See Technicolor Completes Grass Valley Sale, Technicolor to Sell Transmission Biz and Technicolor Sells Stake in Screenvision.)

That's where Rahier fits in. Expect to see some further trimming of Technicolor fat during 2011.

— Ray Le Maistre, International Managing Editor, Light Reading

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