« Home | Goldman Sachs Hedge Fund Blows Up - Down 10% in Au... » | Blog Your Way to Haut Couture » | Bid on Warren Buffett's Lincoln Town Car on eBay » | Apple Movie Store: Does It Make Sense to Buy Movie... » | MobiTV Partners With AT&T Inc To Offer Web TV on P... » | Tying the Knot with WeddingChannel » | Duke and Brown Offer Pay for Admission (PPA) » | The Cheap Revolution » | SportingBet PLC Down 43% After Chairman Arrest » | New York Lady Wins $1 million Lottery Twice! »

September 13, 2006

Mobile Consolidation Game Has Begun with WiderThan and Jamba Deals

posted by MR WAVETHEORY at 9/13/2006 06:35:00 PM
RealNetwork buys WiderThan Co Ltd for $350 million. It seems like a Real steal.
WiderThan Co Ltd had $93 million of cash. So, the enterprise value of the company was closer to $257 million. WiderThan generated $14.2 million of EBITDA in the first half and we can assume it will do even better in the second half since that is when. Just being conservative, let's assume EBITDA for full year 2006 of $28.4 million, and you get a EV/EBITDA ratio of 9 times. Real (Nasdaq RNWK) paid 9x EBITDA for a global mobile distribution business! Nice!

News Corp buys 51% of Jamba for $187.5 million from Verisign Inc.
EBITDA at Jamba? It's anyone's guess. The deal values Jamba at $367 million. If price is indicative of value, then Verisign Inc didn't add much value to Jamba since its acquisition of Jamba two years ago for $274 million.

Which deal was better?
I think strategically Verisign needed to do a deal more than Real Networks needed to do a deal. Verisign's Jamba business wasn't getting crushed because content licensing fees were reducing its gross margin into non-existence. With News Corporation on board, Jamba gets content and escapes the death grip of the spiral costs of content licensing fees. It also introduces the possibility of captive distribution through News Corp's print and online publications.

Real Networks on the other hand got a steal with WiderThan. Real's biggest problem has been EBITDA and generated profits. Now, Real can:
  • distribute online games to cell phone users
  • show profits to shareholders
  • have direct access to mobile carriers - key to a mobile platform/story that is credible
I think the carrier distribution alone is worth the cost of the deal. I give the thumbs up to Real!

Previous Posts


Anonymous Anonymous said...

WiderThan and Verisign are already partners in inter-carrier sms, leading the US industry by handling billions of text messages each month, and growing.

11:46 AM  
Blogger Microsoft Office 2007 said...

Microsoft Office 2010
Office 2010
Office 2007
Microsoft Office
Microsoft Office 2007
Office 2007 key
Office 2007 download
Office 2007 Professional
Windows 7
Microsoft outlook 2010

6:44 PM  

Post a Comment

<< Home