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MARKET COMMENT
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Streaming video specialist GEO Interactive Media (LSE: GIM) today unveiled a potentially lucrative agreement with Ericsson. The Swedish giant has licensed GEO's Emblaze technology and will use it as a component in Ericsson's multimedia solution. Ericsson and GEO will co-develop the combined multimedia solution. It offers a new media channel straight into the hands of consumers. Mobile operators and service providers will be able to offer their users enhanced services of powerful next generation multimedia applications such as live news coverage, sports, weather, finance, video on demand, movie previews, roadside help, and targeted advertising. Pointedly, no cash details of agreement were revealed. Perhaps GEO won't receive any cash at this stage. A report in the Financial Times suggested it will be worth a minimum of $15m over the next year, although it could go higher as this is the reported minimum commitment from Ericsson. Comment Fancy some streaming video to your mobile phone? Watching the big football match or horse race would certainly be appealing to some audiences. The latest news and stock market report would also be popular features. How about cheap video conferencing? GEO's Emblaze technology would enable all this to happen. The Ericsson deal potentially sets GEO on the path to becoming the industry standard for wireless streaming video, and virtually acknowledges GEO's streaming video technology as being the best on the market -- for the time being at least. And that's the problem for those who are looking at investing in Geo. At today's enterprise value of about $1 billion (based on a share price of 707.5p), much of the future is already priced into the shares, standing as they are at a forward price to sales ratio (PSR) of about 16. The investing world is full of companies who've once been market leaders, only for them to be overtaken by bigger and hungrier competitors. Investors in GEO can't afford for the company to put half a pinkie wrong, let alone a whole foot. A final thought. The mass-market usage of streaming video to mobile phones is far from guaranteed. How many people do you see walking the streets with portable televisions? Obviously the mobile phone is already an essential accessory for many, so almost by default streaming video will be much more widely accepted than the portable TV. But apart from video conferencing, it's hard to see most people using the service on a regular basis. Where Next? Geo Interactive Discussion Board
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