7
Strategic Considerations (continued)
Glass Lewis View
Rovis overall revenue and core
revenue growth have lagged
despite substantial investment
(p.10)
Criticizing Rovis recent revenue growth disregards key aspects of our
business Rovi View
Note:
Page numbers under the Glass Lewis View column to refer to the Glass Lewis report
published on Rovi Corporations on 4/30/15. As
many
of
our
stockholders
and
Wall
Street
Analysts
understand,
we
expect
our
Big 4 license renewals to be a significant driver of revenue growth, and they are
all tied to renewal dates later this year and next
Product cycles in our industry are 18-24 months, and even longer when
considering deployment to scale timelines.
As a result, it is patently unreasonable to rely upon the simplistic view that
despite the companys heavy investments, the product segment has
not seen the kind of ramp-up that shareholders may have
expected. Engaged Capitals failure to understand our product
cycles should be concerning to stockholders as it demonstrates a lack
of understanding of the industry in which we operate. GL should also be
held to a higher standard of that understanding in their
analysis
Our product business is an increasingly important part of our connected
platform Our product revenues are an increasingly important piece of our
business; with product revenues increasing to 51% of revenues in Q115
from 45% in 2013. This is clear evidence of our past investments in both IP
and products producing results despite the decline in our analog business
revenues from $129 million in 2010 to $30 million in 2014. Our product
investment has supported core revenue that is up ~$100 million since 2010,
to offset the decline from our analog business Both the absolute revenue and
share of revenue from our product business has been increasing, and its
strong profitability provides incremental margin to our IP business The
significant synergies that exist between our product and licensing businesses
that we have highlighted before, as well as the continued validation from marquee
customers who utilize both our products and IP, we believe, contradicts
GL's assertion of a "failed" product investment strategy
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