RealTime IT News

Firm Hopes to Capitalize on DVD's Growing Popularity

Not only do CD-ROMs and DVD-ROMs provide for storage of large amounts of information, but they're becoming the most cost-effective medium for companies to use for mass distribution of software. DVD-Video discs are also increasing in popularity. Future Media Productions Inc. is a manufacturer/replicator of Digital Versatile Discs (DVD) and Compact Discs (CD).

The Lead Underwriter for this IPO is Prudential Securities Inc and the proposed ticker symbol is FMPI.

Future Media targets high volume customers in industries including Internet/online, film and entertainment, edutainment software, publishing and computer hardware. Though high volume customers help them to maintain their low cost-per-unit, it can also become a problem if they lose any of their current customer base. These high volume customers include America Online, Inc., Modus Media International Holdings, Inc., Lions Gate Entertainment, Interplay Entertainment Corp. and Juno Online Services, Inc.

According to Infotech, CD-ROM disc units sold in the United States by CD-ROM replicators have grown from approximately 443 million units in 1996 to approximately 1.066 billion units in 1999. Also according to Infotech, DVD-ROM disc units sold by replicators in the United States will increase from approximately 520,000 in 1997 to 589.0 million in 2004; and DVD-Video disc units sold in the United States by replicators will increase from 3.4 million units in 1997 to approximately 991.0 million units in 2004.

Future Media has a current production capacity of approximately 30 million DVDs and 140 million CDs per year. They are in the process of moving their facilities to a larger building; they estimate this will allow them to double their current production capabilities. Future Media also has self-sufficient engineering, repair and maintenance capabilities that allow them to preserve their high volume operations and turnaround service.

Sales for Future Media have increased from $36 million in 1997 to $53 million in 1999. The company has also been profitable-from $7.8 million in 1997 to $14.7 million in 1999.

Some of their great success may be attributed to Alex Sandel, one of their co-founders, Chairman of the Board, Chief Executive Officer and President since inception in June 1994. Mr. Sandel was one of the original founders of Packard Bell Electronics (1986) and served as a director of Packard Bell Electronics until 1999.

It does not take an expert to figure out that CD/DVDs are the medium of choice for data distribution. Future Media has chosen a hot market to compete in, and they have been successful in it. In the rough IPO market, a company such as this -- with strong revenues and profits -- may have a good chance of success.