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NDS appears to be another BS acquisition by Cisco

Cisco foolishly bets $5 billion against the success of OTT (Over-the-top content).

Sun, 3/18/12 - 11:59pm    View comments

Another BS Cisco AcquisitionLast week Cisco announced it would pay $5 billion in cash to acquire Bermuda tax haven incorporated NDS Group, which 3-years earlier had gone private in a transaction valued at $2,948,751,000 (page 1).

So why is Cisco now paying $2.051 billion more for NDS when NDS now has -$689.5 million less in total assets (page 52) than it did earlier when taken private (2011-2008)?

5-Year NDS Balance Sheet Data (page 52)

5-Year NDS Balance Sheet Data

Perhaps Cisco is paying $2 billion more because NDS annual revenue has grown a whopping +18.32% (i.e. $148 million, page 51), while NDS annual operating income has grown a stunning +35% (i.e. $63.6 million, page 51) since being taken private (2011-2008).

I mean, in its most recent 6 months, NDS grew revenue year-over-year by an astronomical +7.32% (i.e. $32.55 million) and operating income year-over-year by an outlandish +4.5% (i.e. $5.46 million).

5-Year NDS Statements of Operations Data (page 51)

5-Year NDS Statements of Operations Data

(+) Fiscal year 2011 included 53 weeks while fiscal years 2010, 2009, 2008 and 2007 included 52 weeks.

(1) In January 2011, we sold the OpenBet business, which operated as a separate segment involved in the development and sale of software systems and applications in the betting and gaming market, for net cash consideration of $292 million, as we no longer considered the OpenBet business to be core to our strategy. We have classified the OpenBet business under discontinued operations for all periods covered herein and in the accompanying consolidated financial statements.

Source: U.S. Securities and Exchange Commission

However, this really caught my attention (page 19) about NDS:

"During the six months ended December 31, 2011 and the fiscal years ended June 30, 2011 and 2010, our top ten clients accounted for approximately 72%, 65% and 72%, respectively, of our total revenue. We expect to continue to be dependent upon a limited number of clients for a significant portion of our revenue..."

Finally in my opinion, Cisco has just foolishly bet $5 billion against the success of OTT (Over-the-top content).

Related stories:

Cisco acquisition NDS Pay-TV Piracy resource center

Cisco acquisition NDS accused of pay TV piracy, hacking, sabotage, fabricated legal actions and obtaining telephone records illegally

Cisco tunes into $5bn of execution and reputational risk with NDS buy

What's your take?

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