Rovi Shares Slip 9% As Q3 Results Miss Estimates, Slashes 2013 Outlook

(RTTNews) - Shares of Rovi Corp. (ROVI) slipped nearly nine in extended trading on Wednesday after the digital entertainment technology solutions provider reported results for the third quarter that missed analysts' expectations. The company also slashed its earnings and revenue guidance for the full-year 2013.

However, the company reported a loss for the quarter that narrowed from last year, despite a revenue decline, reflecting an income tax benefit. Meanwhile, the company also announces the review of strategic alternatives for DivX business.

"While we made significant progress toward closing some major deals this past quarter, the reality is that it is taking longer than anticipated to close these transactions and, as such, we did not close any of these expected deals. While we are disappointed in the impact this has on our short-term results, we remain sharply focused on the long-term interest of our stockholders, maximizing the long-term value of our IP portfolio and confident in the value of our assets," President and CEO Tom Carson said in a statement.

The Santa Clara, California-based company reported a net loss of $11.47 million or $0.12 per share for the third quarter, narrower than $13.33 million or $0.13 per share in the prior-year quarter.

Income from continuing operations for the quarter was $7.49 million or $0.08 per share, compared to a loss of $1.89 million or $0.02 per share last year.

Excluding one-time items, adjusted pro forma income for the quarter was $40.63 million or $0.41 per share, compared to $57.82 million or $0.56 per share in the year-ago quarter.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter declined to $142.96 million from $163.68 million in the same quarter last year, and missed twelve Wall Street analysts' consensus estimate of $151.93 million.

The company attributed that revenue decline primarily to continued and anticipated revenue declines within its consumer electronics video delivery and display sales vertical, as well as an absence of new licensing agreements.

The company recorded an income tax benefit of $13.93 million, compared to an income tax expense of $13.71 million last year.

Additionally, Rovi announced that its Board of Directors has authorized a review of strategic alternatives for its DivX business, including a potential sale of the business. The company has retained Wells Fargo Securities as its financial adviser in the strategic review process.

"It is critical we maximize the value of our assets for our stockholders. We believe a strategic review for DivX is an important step for Rovi as we focus on growth opportunities, cost structure and the overall strategic fit of DivX within our core business," Carson stated.

Looking ahead to fiscal 2013, the company slashed its adjusted pro-forma earnings guidance to a range of $1.70 to $2.00 per share from the prior forecast of $1.80 to $2.10 per share, on projected revenues between $585 million and $615 million, down from the previous outlook of $600 million to $630 million.

Street is currently looking for full-year 2013 earnings of $1.95 per share on annual revenues of $613.63 million.

"Looking ahead, we continue to believe that we will come to agreeable terms with these parties, but feel it is prudent given the continued delay to reduce our expectations for fiscal 2013," Carson added.

ROVI closed Wednesday's regular trading session at $18.97, down $0.46 or 2.37% on a volume of 1.23 million shares. The stock plunged a further $1.62 or 8.54% in after-hours trading.