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DVD Software Maker InterVideo Goes Public

DVD software maker InterVideo went public on Thursday as investors cheered the new issues arrival with a 30-percent jump its market value.

The Fremont, California-based company raised $39.2 million for the initial public offering, which was underwritten by SG Cowen and Soundview Technology Group. But based on its opening day of trading, it looks like the company could have raised even more.

On Wednesday, the company decided to jack up the number of shares to 2.8 million at $14 per share, which is an increase from its planned offering of 2.3 million shares at between $11 and $13 per share. The increase in the issuance of 500,00 shares, or more than 20 percent, is a sign there will be healthy demand for InterVideo shares.

And sure enough, when the stock began trading Thursday morning, they immediately popped as much as $4 higher.

The planned sale of shares puts the company's estimated market value to be close to $174 million, based on the 12.4 million shares outstanding, according to the company's IPO filing with the Securities and Exchange Commission.

InterVideo's main software product is called WinDVD, which allows for users to play DVD's on their personal computers. The company has shipped more than 50 million copies of its WinDVD software, which is often bundled together by PC hardware manufacturers, including the two leading players Hewlett-Packard and Dell Computer .

According to the company's financial records, InterVideo has steadily increased revenues over the past few years from $15.4 million in 2000 to $45.5 million in 2002. Last year, the company posted a net profit of $7.7 million in 2002.

In the first quarter of 2003, InterVideo said it posted net income of $1.6 million on revenue of $13.4 million. The company was founded back in 1998, and considered going public last year, before pulling its offering. The company currently employs 218 people.

While the company's focus has been on sales of its WinDVD software, there are indications it plans to diversify into a number of new products.

"Although we have historically derived nearly all of our revenue from WinDVD, in the future we expect to derive an increasing percentage of our revenue from our integrated suite of DVD authoring, editing and recording products for PCs and from sales of our software designed for CE devices," the company said in its IPO filing.

On July 9, InterVideo released WinDVD Creator Platinum 2, what it calls "an integrated software solution that eliminates the need to switch between video editing, authoring and burning software programs, reduces wait times and addresses consumer compatibility issues. Designed to take the confusion and frustration out of movie-making, WinDVD Creator Platinum 2 provides a single, user-friendly interface for capturing, editing, authoring and burning videos to DVDs and CDs," according to a company press release.

InterVideo says its WinDVD Creator Platinum 2 guides users through video capture, editing, authoring and burning the video as a DVD (DVD+/-VR, DVD-Video, miniDVD, VCD, SVCD, DivX, CD) movie. The company says WinDVD Creator Platinum 2 will be available by mid-July for a price of approximately $99.95 on its Web site and at software retail outlets by late summer.