Earnings Preview: Macrovision Solutions

Macrovision Solutions (MVSN) is expected to report Q3 earnings after market close Thursday Nov. 6, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 22c for EPS and $153.79M for revenue, according to First Call.

Analyst Views

Kaufman looks for Macrovision to report Q3 total revenue of $156M, flat versus a year ago. The firm's estimate is based on a 3% increase in Technology Solutions to $112M from $109M a year ago, offset by a 7% decline in Media Network revenues to $43M from $46M, with revenue from the TV Guide Channel expected to be off 5% and from TVG off 10%. Kaufman expects Macrovision to report that it has achieved the bulk of its $50M in annual operating cost reduction. As a result, with revenue expected to be flat, Kaufman looks for total EBITDA of $60M, up from $50M a year ago, due to a 12% reduction in operating expense to $65M.

However, Kaufman looks for EPS of 9c, down from 37c a year ago, due to higher interest expense associated with the company's acquisition debt. Looking forward, Kaufman expects management to temper expectations for 2009 revenue and EPS, given the increasingly difficult economic environment and what is looking to be longer-than-expected time to complete asset dispositions. Kaufman recently lowered its FY09 estimate to account for the sale of the Media Networks to total revenue of $480M, down from a prior $522M, EBITDA of $210M (44% of sales), and EPS of $1.20, down from $1.35.

Macrovision shares have been under pressure due to concerns about the Media Network asset sales. Macrovision recently announced the sale of the TV Guide magazine for just $1, but the transaction was viewed a positive. The sale of the TV Guide Channel and TVG remain an overhang on the company. Kaufman believes the lower end of the company's $350M to $500M target for proceeds from the sale of these assets remain within range. Kaufman's sense is that negotiations for the TV Guide Channel remain on track, but TVG is proving a harder sell in this environment. Kaufman rates Macrovision buy with their target also recently lowered, to $22.

Next Event: Macrovision's analyst and investor day will be held Monday, November 10, at the NASDAQ MarketSite in NYC. Members of Macrovision's management team, including CEO Fred Amoroso and CFO James Budge, will present and update participants on the state of the business and provide financial estimates for 2009. Presentations are scheduled to begin at 9.30am ET and conclude by 3.00pm ET.