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Chyron Has Rough Q3 - Broadcasting & Cable

Chyron Has Rough Q3

Graphics vendor remains optimistic about Axis online system
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Graphics software and hardware supplier Chyron suffered a tough fiscal third quarter, citing the continued economic pressure on its broadcast customer base.

The Melville, N.Y.-based firm reported an operating loss of $1.1 million for the quarter ending Sept. 30, 2009, compared to operating income of $0.7 million for the third quarter of 2008. Net loss for the quarter was $0.8 million, or $0.05 per share, basic and diluted, as compared to net income of $16.7 million, or $1.07 basic and $1.00 diluted earnings per share, for the third quarter of 2008. Revenues were down 31% compared to the same period in 2008, declining from $9.3 million to $6.4 million.

Chyron noted that its third quarter 2008 results included a non-recurring income tax benefit of $16.4 million, or $1.05 per basic share and $0.98 per diluted share, from the reversal of a portion of the company's valuation allowance for deferred tax assets.

“Clearly the ongoing recession continued to adversely impact our revenues,” said Chyron president and CEO Michael Wellesley-Wesley. “The economic recovery that the stock market seemed to have been forecasting did not materialize for us in our third quarter.”

On a more positive note, Wellesley-Wesley said that the fourth quarter was shaping up to be the best of the year, with strong order intake and projected bookings. He noted that five of the top 20 station groups are using Chyron’s new Axis online graphics product in some capacity, including Gannett, Fox, Scripps, Post-Newsweek and Sinclair. In particular, Sinclair plans a broader adoption of the Axis system after using the Axis map product for several years, said Wellesley-Wesley, with an initial rollout across about 10 stations.

Scripps has already rolled out Axis in four of its stations as part of a group-wide graphics overhaul.

Axis, which is sold as a SaaS (Software as a Service) product, currently accounts for only about 5% of Chyron’s overall revenues. But it is growing rapidly, said Wellesley-Wesley, who thinks Chyron is well-positioned for broadcast customers who have cut back on capital spending and are looking instead to pay for ongoing services.

“The speed of adoption and pace of growth we’re experiencing make me very optimistic for Axis in 2010 and beyond,” he said.

Chyron’s stock dipped 6.88%, or $0.13, in NASDAQ trading Thursday, closing at $1.76.

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