Correcting from Wed: DivX says it expects single-digit SG&A growth through year
Correcting from Wed: DivX says it expects single-digit SG&A growth through year
(This story corrects an earlier version from Wednesday, which incorrectly stated DivX CEO Greenhall predicted single-digit revenue growth, where in fact he predicted single-digit SG&A growth. We apologize for the error.)
At a technology conference Wednesday afternoon, DivX, Inc. (Nasdaq: DIVX) CEO Jordan Greenhall said the San Diego, Calif.-based video compression software maker expects single-digit growth in selling, general and administrative expense for the rest of the year. Investors were flummoxed by the company’s nearly doubled 2007 first-quarter SG&A expenses, $10.8 million, from $5.9 million for the first three months of 2006, which came to light in DivX’s Q1 earnings release May 1. DivX also plans to penetrate the TV set-top box, mobile phone and camera markets, Greenhall told the Cowen and Company’s Annual Technology Conference in New York City.
“We hired some heavy hitters from Adobe, Sony and Yahoo!” Greenhall said. “The recruiting fees hit us in Q1.”
DivX announced Wednesday afternoon former Yahoo! sales executive Pamela Thompson Johnston was appointed as the company’s senior vice president for sales and marketing.
Greenhall apologized for poor communication with investors in the first quarter.
“We exceeded every single one of our targets, but did a poor job communicating with folks like yourself,.” Greenhall told investors.
After releasing first quarter results in early May, DivX shares have lost more than $5, or about 25%, in value. At that time, DivX announced a $3.7 million profit, or $0.10 a share, for the first quarter ended March 31, compared with $3.3 million, or $0.11 a share, in the year-ago period. Analysts on average were expecting a first-quarter per-share profit of $0.14. Over the last 52 weeks, DivX shares have fluctuated between $13.80 and $31.89. On Wednesday, DivX closed at $15.09, up $0.42, or nearly 3%..
DivX, incorporated in 2000, is hiring a new chief financial officer to rectify the investor relations problems, Greenhall said. The company is close to hiring a CFO and “hopes to have an offer out by this time next week,” Greenhall said. DivX’s former CFO left the company April 24 for personal reasons.
Greenhall characterized the company’s social networking video website Stage6 as “a YouTube that doesn’t suck.” DivX is differentiating itself by providing longer form video support and professionally produced content, he said. The website has had 8.3 million visitors this month and when the website reaches 10 million visitors, “It will get exciting,” he said.
The company’s DivX Connected product will be competing head-to-head with Apple TV. Greenhall said he hopes Apple’s set-top device is successful, but does not control the market. DivX Connected will have more platform capabilities than Apple TV and will support a wider variety of digital formats, Greenhall said.
Also on the call, Greenhall said:
• In Western Europe, 72% of new DVD recorders have DivX capability, up from 32% a year earlier
• The Google advertising deal and licensing with DVD players makes up almost all of the company’s revenue
• The company will not manufacture the DivX Connected set-top box, but will sell the technology and licensing to other manufacturers
You can access the presentation here.
