Seachange International Inc. has a market cap of $226.2 million; its shares were traded at around $7.21 with a P/E ratio of 24.9 and P/S ratio of 1.1. SEAC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:The identifiable assets acquired and liabilities assumed in the VividLogic acquisition were recognized and measured based on their fair values. The excess of the acquisition date fair value of consideration transferred over the fair value of the net tangible assets and intangible assets acquired was recorded as goodwill. During the second quarter of fiscal 2011, based on an independent third-party valuation of the intangible assets of VividLogic, Inc., the Company substantially completed the purchase price allocation for VividLogic Inc. Prior to the completion of the purchase price allocation, the Company reported provisional amounts for this acquisition in its first quarter financial statements. The change in the estimates consisted of an increase of $2.2 million of intangible assets and an increase of $1.0 million in deferred revenues. In addition, there was an increase in the estimated earnouts for $700,000, a $1.2 million increase in indemnification assets, and a reduction of goodwill of $1.4 million. During the measurement period, the Company adjusted the provisional amounts recognized at the acquisition date to reflect the new information obtained about facts and circumstances that existed as of the acquisition date, that if known, would have affected the measurements of the amounts recognized at that date. These measurement period adjustments have been applied to the Consolidated Balance Sheet, Consolidated Statement of Operations, and Consolidated Cash Flows as of April 30, 2010, so that the effect of the measurement period adjustments to the allocation of the purchase price would be as if the adjustments had been completed on the acquisition date.
On April 26, 2010, the Company sold its entire 19.8% ownership interest in Casa Systems, Inc. (“Casa”) back to Casa, a development stage company that specializes in video-on-demand products with the telecommunications and television markets, for $34.1 million realizing a pre-tax profit of $25.2 million which is included in the Consolidated Statement of Operations for the applicable period.
Product Revenues. Product revenues decreased 3% to $22.0 million in the three months ended July 31, 2010 from $22.6 million in the three months ended July 31, 2009. Product revenues from the Software segment accounted for 68% and 64% of the total product revenue for the three months ended July 31, 2010 and 2009, respectively. The Servers and Storage segment accounted for 32% and 36% of total product revenues in the three months ended July 31, 2010 and 2009, respectively. The decrease in Product revenues was due to a decrease in VOD server revenues year over year due to lower shipments of VOD servers to North American and Latin American service providers, partially offset by higher Broadcast server and software revenues to one of our large North American customers.
Servers and Storage Revenues. Revenues from the Servers and Storage segment for the three months ended July 31, 2010 decreased $1.5 million or 13% compared to the three months ended July 31, 2009. The decrease in product revenues in the three months ended July 31, 2010 of $1.2 million compared to the same quarter in the previous year was primarily due to decreased shipments of VOD servers when compared to the second quarter of last year which included large shipments of VOD servers to North American customers and a Latin American customer. The decrease was partially offset by shipments of Broadcast servers to a customer in North America.
Research and Development. Research and development expenses consist primarily of the compensation of development personnel, depreciation of development and test equipment and an allocation of related facilities expenses. Research and development expenses increased to $12.2 million, or 23% of total revenues, in the three months ended July 31, 2010, from $12.0 million, or 26% of total revenues, in the three months ended July 31, 2009. The increase year over year is primarily due to the inclusion of eventIS and increased Philippine engineering costs partially offset by lower domestic research and development headcount costs.
Selling and Marketing. Selling and marketing expenses consist primarily of compensation expenses, including sales commissions, travel expenses and certain promotional expenses. Selling and marketing expenses decreased from $6.3 million, or 13% of total revenues, in the three months ended July 31, 2009, to $6.2 million, or 12% of total revenues, in the three months ended July 31, 2010. The decrease compare
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