Kudelski slips into red as TV dip and IoT investments take toll

Kudelski Group slipped into the red in the first half of this year on weaker digital TV solutions sales, due in particular to subscriber losses at European customers, and losses in its growing cybersecurity business.

Kudelski posted first half revenues of US$552 million, up 12.5%, but operating income dived by 80.2% to US$6.7 million, while the group turned in a net loss of US$5.7 million compared with a profit of US$21.4 million for the same period last year.

Integrated digital TV segment sales increased by 12.9% to US$387.3 million, but operating income fell from US$43.1 million to US$13.1 million. Kudelski said that the saturation of traditional pay TV offerings in developed markets resulted in decreased revenues, particularly in Europe where several established pay TV operators continued to lose subscribers. However, Kudelski boosted its intellectual property licensing revenues in the first half by entering into additional patent licensing agreements.

Kudelski increased revenues in its cybersecurity business, but posted increased losses here thanks to its increased investment in areas such as the Internet of Things.

Kudelski said that demand for cybersecurity, Internet TV and Internet of Things solutions is strongly increasing, especially in the US market.

The group said it was implementing measure to “realize key synergies” across its operating units and had created a specific to target new customers and increase its market share.

Kudelski confirmed its full year revenue guidance but lowered its operating income guidance to between US$45-65 million. The group highlighted the impact on the weaker outlook on its digital TV activites, particularly the Conax business that caters primarily to smaller operators.