Sonic Solutions has announced today that it will acquire digital media company DivX, merging the operations of the company into its own.
Under the terms of the agreement, Sonic will pay about $326 million in cash and stock, with DivX stock holders receiving 0.514 shares of Sonic and $3.75 cash per share. DivX closed the day trading at $8.79, after closing at $6.95 on Tuesday.
Sonic says the deal should close in September, and says the deal will possibly double its EPS (earnings per share) for the fiscal year that starts in April 2011.
For over 20 years, Sonic has provided the software used to press and distribute most DVDs, but the company recently began an expensive endeavor into downloadable content, teaming up with Best Buy for the CinemaNow online movie service.
With DivX, the company should be able to expand its market, as DivX tech is already embedded in over 300 million devices worldwide, ranging from smartphones to Blu-ray players and HDTVs.
“Our studio, storefront, and consumer electronics partners agree: they want a clear and efficient path to deliver premium content to their customers,” says Dave Habiger, president and CEO of Sonic Solutions. “The combination of Sonic and DivX promises to be the foremost provider of platforms, tools, and technologies for the efficient delivery of premium video entertainment to virtually any type of consumer electronics device. We expect DivX’s deep technology and broad deployment in the CE and mobile areas to give us significant leverage as we expand and enhance our RoxioNow premium entertainment platform.”
Result for: earnings
On Thursday, Nintendo will report its earnings for the fiscal year ended March 31st, and for the first time since 2004, its profit is expected to be lower than the previous year’s.
The company says it expects a profit of 230 billion yen ($2.42 billion USD), down from their record fiscal 2009 where the company made 279 billion yen ($2.94 million USD).
Nintendo blamed the lowered profits on a strong yen last year, and the price cut on the Wii console last October, from $250 to $200 USD.
Analysts had expected a full fiscal year profit of 229 billion yen.
The company is also expecting to have sold 20 million Wii units and 30 million DS/DSi during the period, but some analysts seem to think they are sandbagging. “We are expecting the results to be better than the company forecasts for the Wii,” notes Yuta Sakurai of Nomura Securities. “Christmas shopping was strong.”
Result for: earnings
According to GameStop, recent PS3 and Wii hardware shortages will continue for some time, both in store and online.
“I am not exactly sure that I have a total answer, obviously, it is a question that we ask the platform holders,” said the company during their recent earnings conference call. “Consequently, I can tell you that we do anticipate that we will be in that situation for the PS3 for another couple of months, unfortunately, because we could sell a lot more hardware than what we have on both that and the Wii platform.”
Fortunately for would-be Wii buyers, the retail store says it expects the Wii to be back in stock before the PS3.
As for why both consoles are in shortages? The “unprecedented demand” has left the companies “still scrambling to catch up from the December surge of hardware that occurred.” In December, the Wii set an all-time record for most consoles sold in a month in the U.S.
