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Liberate Climbs on iTV Deal

Liberate Technologies (Nasdaq: LBRT)rose 66 U.S. cents to $8.47 in morning trading Thursday after announcing anagreement to provide software to Charter Communications (Nasdaq: CHTR) fornew interactive TV (iTV) services.

Liberate said, however, that it will incur expenses of approximately $2 million thisquarter as it ramps up to deliver on its obligations under the deal.

Liberate called the contract “a milestone event,” boasting that it is the “largestcable customer commitment in the United States for second-generationinteractive services.”

Said Liberate chief executive officer Mitchell Kertzman: “We feel this partnership will serveas a catalyst to move other U.S. cable operators to offer interactiveservices.”

At least 300,000 set-top boxes will use the new products, with customers inSt. Louis, Missouri receiving the first of them. The companies are currentlyrunning a pilot program in St. Louis.

Excluding the $2 million in charges — which cover market research, testinginfrastructure and labs and staffing — Liberate said it expects revenue forthe fourth quarter ending May 31st of $14.5 million to $15 million, up from$9.1 million in the year-earlier quarter. The company also predicted a proforma loss of 13 to 15 cents per share, against a 13-cent loss last year.

Liberate, based in San Carlos, California, provides software that deliversInternet content to television set-top boxes, game consoles and otherinformation appliances.

Market analyst Jupiter Media Metrix reported Monday that despite mass-market barriers of geography and technology, interactive television (iTV) will grow more than 80 percent per year over the next four years, to reach 46 million U.S. homes by 2005.

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