Rimage acquires Qumu to lead disc publishing market
Qumu, the leader in enterprise video communications, announced yesterday that it was acquired by Rimage Corporation (NASDAQ: RIMG), a publicly-traded leader in optical disc publishing. This cornerstone acquisition for Minneapolis-based Rimage shows Qumu’s proven product in a hot market. The transaction is valued at $52 million, with $39 million consisting of cash and one million shares of Rimage common stock.
San Francisco-based Rimage brings cash flow, global infrastructure and an extensive customer base that will give Qumu an international presence. Rimage is an industry-leading provider of on-demand CD/DVD/Blu-ray Disc publishing systems. The acquisition provides Rimage with a strong presence in the rapidly growing video communications market with an established partner, serving 100 Global 1000 customers and generating strong revenue growth.
"Qumu is a cornerstone acquisition for Rimage and immediately positions us as a leader in the growing market for video communications and social enterprise applications for business," said Sherman Black, president and chief executive officer of Rimage Corporation. "The Qumu acquisition accelerates Rimage's strategy to distribute live, on-demand, downloaded and optical media content for a broad range of applications, on any mobile or desktop device. This acquisition significantly expands our market to new enterprise customers and offers opportunities for cross-selling to the installed base of customers of both Rimage and Qumu."
Qumu helps corporations create, manage and securely distribute video and related content and provides analytics on content usage. With an estimated total available market of $2 billion, it serves companies in banking, technology, and telecom, among other industries, as well as universities and government agencies. It sells its products through a direct sales force and through premier distribution partners, including Sony and AT&T.
Qumu's revenue has increased more than 45 percent per year over the past three years. In 2010, it generated $10.3 million in revenue and it is on track to achieve approximately $15 million in 2011. Based on current opportunities and expectations, Qumu is expected to generate approximately $21 million in revenue in 2012.
"The Qumu acquisition provides customer and technology synergies with our disc publishing business and virtual publishing initiative," continued Mr. Black. "We will continue to invest in disc publishing to provide our customers with the leading edge solutions they expect from us. The beta testing of our virtual publishing technology, a secure 'push-based' delivery platform, continues to proceed well and we remain on track with validating the concept."
With Qumu, Rimage will be able to provide its customers with comprehensive solutions for all content distribution applications. Qumu allows customers to reliably and securely offer their content across multiple platforms including the desktop, smart phones and tablets. Qumu customers will benefit from Rimage's virtual publishing technology which will add secure push delivery capabilities to Qumu's "pull-based" streaming solution. Rimage's net free cash flow, global footprint and infrastructure will enable Qumu to accelerate its expansion into new markets.
Qumu will be integrated into Rimage. Its operations will remain in San Bruno, California. Ray Hood, president and chief executive officer of Qumu, will remain the leader of the Qumu team and will become a senior vice president of Rimage.
The Rimage Board of Directors today announced an increase in the cash dividend in the fourth quarter to $0.17 per share. This will be payable on December 15, 2011 to shareholders of record on November 30, 2011. Based on the closing price on Friday, October 7, 2011, this represents a 5.0% dividend yield.
"As a result of the Qumu acquisition, Rimage is positioned to generate double digit top line growth in 2012. Overall, we anticipate cash from operations in 2012 to match the level of cash generated in 2011. Given our expected cash position post-acquisition and our confidence in generating overall growth in 2012, we believe a 70% dividend increase is warranted," Mr. Black concluded.
With the acquisition of Qumu, the Company now expects 2011 revenues of $86 million to $88 million and earnings per share of $0.42 to $0.45. Excluding fourth quarter Qumu revenue and Qumu transaction and restructuring costs of $2.0 million, both revenue and earnings per share are in line with the financial guidance provided last quarter and at the beginning of 2011.
For 2012, the Company expects Qumu annual revenue growth to continue at greater than 40%. It also anticipates that Qumu will contribute slightly to cash flow in 2012. In disc publishing, the Company expects continued solid execution and cash generation. Technology substitution and softness in the retail segment will continue to negatively impact 2012 revenues and will only be partially offset by growth in disc publishing solutions and geographic expansion. The Company expects disc publishing revenues to decline in the low single digits over this period and to be able to maintain low double digit operating margins.
Overall, Rimage revenues are expected to increase more than 15 percent in 2012. The Company will continue to optimize its expense structure in disc publishing and leverage the Rimage global infrastructure to accelerate the Qumu opportunity.
Dell to sell cloud-based iPaaS Boomi in US$4bn deal
Global investment firm Francisco Partners and private equity platform TPG Capital have entered into an agreement with Dell Technologies to acquire cloud-based integration platform as a service provider Boomi in a cash deal valued at US$4bn. The deal is expected to complete this year.
“Boomi has flourished as part of Dell Technologies, growing exponentially since we acquired them in 2010. This proposed transaction positions Boomi for its next phase of growth and is the right move for both companies, our shared customers and partners,” said Jeff Clarke, vice chairman and chief operating officer of Dell Technologies.
“For us, we're focused on fuelling growth by continuing to modernise our core infrastructure and PC businesses and expanding in high-priority areas including hybrid and private cloud, edge, telecom and APEX. All designed to help organisations thrive in the do-from-anywhere economy.”
Dell’s Boomi sell-off follows VMware spin-off
This announcement comes just two weeks after Dell said it would spin-off its 81% equity ownership of VMware to form two standalone companies. This would result in an expected US$9.3bn cash dividend payment to Dell, which says it will use those funds to pay down debt.
When Dell acquired Boomi in 2010 for an undisclosed fee, Boomi offered the industry’s only pure SaaS application integration platform, powered by its revolutionary AtomSphere technology. Dell saw Boomi as addressing one of the top barriers to cloud adoption at that time, which was managing and integrating cloud-based applications with existing applications and databases.
Now, Boomi has more than 15,000 customers globally and is still seen as a leader when it comes to organisations connecting applications, processes and people across a range of locations and devices – a process that can take weeks rather than months.
“I am incredibly proud that through innovation, passion and relentless execution, the Boomi team has created a unified platform for the modern-day hybrid IT landscape that thousands of customers worldwide depend on to digitally transform their business,” said Chris McNabb, chief executive officer of Boomi.
“By partnering with two tier-one investment firms like Francisco Partners and TPG, we can accelerate our ability for our customers to use data to drive competitive advantage. In this next phase of growth, Boomi will be in a position of strength to further advance our innovation and market trajectory while delivering even more value to our customers.”
Francisco Partners has invested in more than 300 technology companies since its launch 20 years ago and has more than US$25bn in assets under management.
“The ability to integrate and connect data and workflows across any combination of applications or domains is a critical business capability, and we strongly believe that Boomi is well positioned to help companies of all sizes turn data into their most valuable asset,” said Dipanjan Deb, co-founder and chief executive officer, and Brian Decker, partner, at Francisco Partners
Nehal Raj, partner, and Art Heidrich, principal, at TPG Capital added: “The need for automation and data integration across applications has never been greater. Boomi's cloud-native platform enables enterprises to streamline business processes and is essential for driving digital transformation.”