Replay, in its filing with the Securities and Exchange Commission, said the funds raised would go to activities such as advertising its products, new product and service development, and subsidizing the cost of its products. The company did not yet disclose how many shares it plans to sell or the projected price range.
Replay Networks offers "personal video systems," also known as digital video recorders (DVR), and a complementary service that allows television viewers to pause and rewind live television by recording video streams to the device's hard drive. The company's service also allows viewers to customize television schedules and specialized content.
Replay faces potential competition not only from TiVo, but from Microsoft and its WebTV business. WebTV has added DVR functions to its set-tops that are being developed in conjunction with Echostar. Other companies are doing the same.
To battle in the marketplace, Replay has so far signed Panasonic to manufacture and develop new DVR devices, and Sharp Electronics has signed a non-binding letter of intent to make the devices as well.
Interestingly, Echostar is said in the firm's filings to have signed a non-binding letter of intent to incorporate the Replay service into its satellite receiver products, which would appear to be a blow to WebTV, which is already providing such services. This relationship had not previously been disclosed.
Echostar, along with Sharp, has also taken an equity stake in Replay.
News of the offering comes as International Data Corp. projects the market for DVR devices will grow to about 10 million units in 2004. That leaves plenty of room for growth for both Replay and TiVo. Replay said in its filing it has sold about 6,000 DVRs to date, and TiVo said in its earnings report earlier this week that it sold 26,000 receivers during its fourth fiscal quarter.
The offering is being handheld by Morgan Stanley Dean Witter; Bear, Stearns & Co; Chase H&Q; Deutsche Banc Alex Brown; and Wasserstein Perella Securities.
Replay disclosed that it has not yet recognized any operating revenues since the company's incorporation in 1997, and that "we have incurred significant losses and have had substantial negative cash flow, and we may never achieve profitability," it warned. As of Sept. 30, 1999, the company had an accumulated deficit of $23.6 million, it said in the filing.
Numbers like that didn't scare investors away from TiVo's initial public offering, though. TiVo set a target price for its IPO of $11 to $13 per share, and eventually sold 5.5 million shares in Sept. 1999 at $16 a piece, raising $88 million. Shares have traded as high as 78 since then, although the stock dropped about 6 percent today to close at $38.50.
Among other potential competitive issues the company listed in its filing, Replay noted that a division of Gemstar had filed suit against TiVo over use of electronic program guide data, and that a similar lawsuit against Replay could not be ruled out.