Knobias Clip Report (10-2-2007)

Sumbmited From Knobias ClipReport


ONT: Video Compression Technology Could See Growth in Coming Years

Tuesday’s session saw investors take a breather following Monday’s rally. Numbers from the housing market slowed much of the momentum while additional reports from the car manufacturers saw declines from Ford and Toyota but increases from GM and Honda.

One name in the large cap space that saw a huge increase in volume in price was Akamai Technologies Inc. The company provides services for accelerating and improving the delivery of content and applications over the Internet from live and on-demand streaming videos to conventional content on web pages to tools that help people transact business.

Shares gained 7.58% on over 17.74 million shares traded on no news. Some of the speculation surrounding the name suggested that Monday’s night Major League Baseball game caused much of the gain.

The pennant races over the past few weeks had many fans checking the MLB.com site for news and highlights from games. Akamai, which provides MLB.com’s MLB Advanced Media with content distribution and audio/video streaming, could have seen the largest use of their services and products in one single day on Monday.

As sports enthusiasts know, the one game tiebreaker between the San Diego Padres and the Colorado Rockies was broadcast on MLB.TV with the help of Akamai. Turner Broadcast Station or TBS also broadcast the game but that channel isn’t available in every market and household. Many had to sign up for MLB.com’s playoff package to be able to view the game.

While streaming video or IPTV isn’t mainstream currently, the growth in the sector is never more present than now. Google’s use of YouTube as a new advertising channel will also solidify this area’s credibility as a medium of communication.

One name in the small cap space that should also see this escalation is On2 Technologies Inc. (ONT). The Company is also a technology firm at the forefront of digital video compression. The have recently signed agreements with AVIC Ltd, a Japanese corporation that specializes in business development in Taiwan, and ADYA Technologies in India to expand On2's presence in these markets towards increasing adoption of On2's TrueMotion(R) VP6(TM) and VP7(TM) compression schemes and other solutions for media companies, enterprises, carriers, and developers.

While the Company is currently in proxy deliberations for holders to decide on a number of proposals including the reverse split of shares and increases in the number of authorized, top line growth is being seen evident by the revenue increase of 66% year over year from their second quarter results.

Revenue increased to $2,554,000 for the three months ended June 2007 compared with $1,535,000 for the three months ended June 2006. Revenue decreased 9% for the three months ended June 30, 2007 from revenue of $2,815,000 for the three months ended March 31, 2007. The decrease in revenue quarter over quarter was noted as being the result of a large deal completed in the first quarter.

In any event, as internet video viewing increases over the coming years, companies providing the technology will undoubtedly see increases in top line numbers. Investors would be wise to watch.




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