ORCA "A Whale of a company"

Orca wins $3m contract but issues revenue warning

Emblaze's Orca will be the sole provider of a full video-on-demand service to a leading media company, but this revenue will be recorded only in 2006.

Middleware and Internet protocol television (IPTV )applications developer Orca Interactive (AIM: ORCA) announced at the end of last week that it had secured a significant contract win. Orca is part of the Emblaze group (LSE: BLZ).
Orca signed a strategic contract with a franchise of one of the world’s leading media companies -- which was not named -- to become the sole provider of a full video-on-demand service.

The contract will initially result in $3 million of committed revenue to Orca. Orca stated that given its status as the sole provider to the franchise, it also believes that this deal has the potential to generate substantial further revenues over the coming years.

Orca noted, however, that the timing and terms of the contract will mean that revenues for 2005 will fall significantly short of market expectations. Orca expects to recognize only a small part of the initial revenues from the contract in 2005.

Orca now expects that revenues for the second half of the current year will be broadly similar to those reported for the first half and, therefore, that reported revenues for the full year ending 31 December 2005 will fall significantly short of current market expectations. Net cash at the year-end is expected to stand at approximately $21 million.

In addition, Orca agreed to acquire a minority stake in the franchise for an investment of $2.5 million. This investment is intended to provide Orca with an opportunity to benefit from the expected significant growth and future profitability of the franchise. The compnay also believes that having a strategic relationship with a global media company has the potential to enable Orca to introduce an important value added partner, in the form of content, to future bids, which will strengthen Orca’s position in the market.

A significant proportion of Orca’s overall revenues from the contract will be generated from the provision of licenses for the use of Orca’s RiGHTv IPTV middleware. In addition, as Orca is the prime contractor, revenues will also be generated from professional services and complementary third party IPTV solution systems.

Published by Globes [online], Israel business news - www.globes.co.il - on Sunday, January 01, 2006