ACTON, MASS.: SeaChange International said it has signed a definitive agreement to sell its broadcast server and storage business to a group of investors led by VantagePoint Capital Partners. Terms were not disclosed. The new, independent company will be named XOR Media. Zheng Gao, president of SeaChange Storage and Servers, will become CEO of the new XOR Media.
“This divestiture is an important part of our strategy to transform SeaChange into a pure play software company, significantly reduce our overall cost structure, and strengthen our ability to compete in delivering next generation multiscreen video solutions, while generating cash,” SeaChange CEO Raghu Rau said. “It’s important to note that this sale is not a parting of ways between SeaChange and the new company XOR Media. We will continue to work together to offer our customers a complete solution. We see this divestiture as a step toward a future relationship—not the ending of one.”
Mass High Tech notes the move follows a round of staff cuts in February that were intended to save the company $5 million a year. SeaChange will report its fiscal 2012 fourth quarter and full year results March 29. For its third fiscal 2012 quarter ending Dec. 8, 2011, SEAC reported net income of $408,000 on revenues of $53.4 million, compared to a loss of $5.2 million on revenues of $49.1 million for the comparable quarter a year before. It reported cash and equivalents of $70.7 million and long-term liabilities of $7.2 million as of Oct. 31, 2011.
VantagePoint Capital Partners, which lists offices in San Bruno, Calif., Beijing, and Hong Kong, has an extensive tech portfolio that includes energy, medical and communications technology, and brands like Klipsch Audio and Blue Whale, a Chinese data security firm. VantagePoint’s Terry Chen said the firm was “excited about the synergy” between XOR and Blue Whale, for example.
“We see this as a key investment with the tremendous potential of XOR Media’s products, technologies, and people resources, operating independently and in partnership with SeaChange,” he said.
As a result of the change in business, SeaChange will have the flexibility to offer server and storage products from any company, including XOR Media, as part of its video platform. SeaChange will continue to provide customer service and support to all of its VOD streaming service provider customers, with renewed focus as a result of this transition, and will also provide customer service and support to any customers who purchase storage products as part of its reseller agreement with XOR Media.
Shares of SeaChange (NASDAQ: SEAC) bumped briefly on the news by a single percent to around $8.25 before settling down again below $8.20. The sale is expected to close after customary regulatory approvals.
~Deborah D. McAdams
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