Signs of Consolidation in the Digital Signage Software Space?
Author: Bill Gerba on 2004-12-29 15:33:22
Back in
May, I highlighted PRN, a mature digital signage company who was (and still is,
I think) readying for an IPO, in an article called "
PRN:
A Digital Signage IPO Story."
At the time, it was encouraging to see a company in our industry that
was "growing up" and entering the public market. Since then, things have been delayed a bit,
but there's no doubt that as the industry continues to expand, we'll see more
of this type of thing.
In
fact, I came across this
press
release a few days ago which notes that
Inscriber, another signage software
provider, is being acquired by
Leitch,
a high-def and broadcast video technology company.
While the release suggests that the primary intent of the merger is to
consolidate the two companies’ technologies and customer bases in the broadcast
video and high definition spaces, I can also envision a scenario where
Inscriber’s InfoCaster software could be combined with some of Leitch’s video
creation, management and distribution software to create a powerful solution
for the digital signage space. And
while signage doesn’t currently appear to be foremost on Leitch’s mind, that
could change as the market continues to mature.
One
thing that I haven’t been able to figure out about this deal, though, is the
numbers... The company is being acquired for $18M, yet is expected to generate
$14M annually, of which 60%, or almost $8.5M, is margin. That means that Leitch basically paid 2x
Inscriber’s annual gross margins for the company. If true, that’s an amazing deal for Leitch, however I have to
believe that there’s more than meets the eye here. I’m looking forward to reading Leitch’s next quarterly statement
to see if there is a ready explanation.
Regardless of how this deal turns out for Inscriber or Leitch, we’ll continue
to see consolidation and continued growth in the signage market for quite some
time to come. With powerful
dynamic digital signage
solutions enabling new and creative business models, companies offering
digital signage hardware, software and services will continue to pop up to fill
some need in the marketplace.
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