This Canadian penny stock cash seeks to carve out a special niche as it encodes and distributes live feeds through its Digital Platform on a subscription basis. It also licenses its technology. It has won several big clients, including the NBA and Barclays Premier League, but it faces fierce competition from entrenched companies such as YouTube, Netflix and Amazon. The company is committed to research spending and has a strong balance sheet, but the loss of one big contract—like one from the NHL this past year—has a substantial impact on its revenues.
NEULION INC. (symbol NLN on Toronto; www.neulion.com) is an online video technology company headquartered in Plainview, New York. It takes the live feed of content providers and encodes and edits it. NeuLion then handles distribution, rights management, advertising and payment processing for that content.
The company generates revenue by offering its NeuLion Digital Platform on a subscription basis. Its fees are determined by the number of events and channels it streams for a client, the number of connected devices it enables, and the volume of digital video content it delivers. In addition, the company factors in the sales that a client makes from the content.
NeuLion also generates revenue from licensing its technologies, including its consumer electronics software development kit and its MainConcept software for video developers.
In the latest quarter, the company’s revenue fell 9.3%, to $23.9 million from $26.3 million. (All figures except share price and market cap in U.S. dollars). The $2.4 million decrease was due to the loss of a $4.3 million contract to stream games for the National Hockey League.
NeuLion lost $1.9 million, or $0.01 a share, in the latest quarter. It earned $2.1 million, or $0.01 a share, a year earlier.
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Penny stocks: Company spends a high 18% of sales on research
The company operates in an extremely competitive market, and its major rivals include firms, such as MLB Advanced Media and Verizon Digital Media Services, that build, license and deploy digital video content. Other competitors include video software providers such as Brightcove, Kaltura, Ooyala and Adobe.
NeuLion also faces indirect competition from media technology companies such as Hulu, YouTube, Netflix, Amazon and sports/entertainment networks. They develop their own technologies and then pay production companies for the right to distribute their content to consumers.
In addition, NeuLion’s consumer electronics and MainConcept technologies face competition from much larger firms providing similar products. Those firms include Microsoft and Google.
Still, the company supplies its technology to a wide range of major customers, including the NBA, UFC, the Barclays Premier League and Tennis Channel. In the most recent quarter, NeuLion also spent a high $4.2 million, or 18% of its sales, on research. That makes the company seem less profitable than it actually is.
NeuLion’s balance sheet is also strong: it holds cash of $32.7 million, or $0.12 U.S. a share; it has no debt.
TSI Network recommendation: We don’t recommend NeuLion.
A comment on NeuLion. I have used there streaming video to watch WHL hockey games and the video is very poor quality. And overall the streaming is poorly done. I only watch it because my grandson plays for the Red Deer Rebels in the WHL and they stream their away games. I go and watch all the home games in Red Deer.
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A comment on NeuLion. I have used there streaming video to watch WHL hockey games and the video is very poor quality. And overall the streaming is poorly done. I only watch it because my grandson plays for the Red Deer Rebels in the WHL and they stream their away games. I go and watch all the home games in Red Deer.