Content
delivery provider DG FastChannel showed progress in the second quarter,
increasing revenues 38% from the same period in 2009, to $60.3 million from
$43.7 million, and posting net income of $9.0 million, or 32 cents per share,
compared to $3.6 million and 16 cents per share a year ago.
DG
FastChannel's second-quarter revenue beat Wall Street analysts' expectations of
$55.6 million. The company said it is experiencing strong growth in delivering
high-definition commercials as more advertisers adopt the new format, in
addition to overall growth as the larger advertising business recovers from its
2009 downturn. But its stock slipped 5.5% in NASDAQ trading Wednesday, falling
from $40.53 to $38.26.
On the
earnings conference call, analysts questioned DG FastChannel Chairman and CEO
Scott Ginsburg about large sales of DG FastChannel stock he has recently made
(Ginsburg sold 400,000 shares in June, netting $17 million, and made other
large sales in the past nine months), and asked for more details about the
company's mix of HD ads versus standard-definition ads.
Ginsburg
explained that after 12 years at the company, he is looking to provide some
liquidity for his children. As for HD spots, DG FastChannel President and COO
Neil Nguyen said that while HD spots grew strongly from the first to second
quarter, they still only represent 7-8% of the overall volume of spots that the
company delivers.
DG
FastChannel didn't detail the financial performance of its Pathfire syndicated
content delivery business on the call, though Nguyen said that its new HD DMG
platform is now fully deployed and that Pathfire has transitioned from a
"wholesale platform" to a "full-service offering" over the past 14 months. That
change in strategy is driven in part by the fact that major Pathfire customers
CBS, Warner Bros. and Ascent have created their own platform to deliver HD
syndicated content, "Pitch Blue."
