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Terayon Gets Graphic

2/16/2007 7:00 PM Eastern

Terayon Communication Systems — after a tumultuous year during which it restated financial results dating back to 2000 — is finally lifting its head out of the accounting books with a new product offering.

The Santa Clara, Calif.-based provider of digital-video networking applications this week is expected to announce three applications for its CherryPicker video-processing platform to let operators insert graphics natively into a compressed MPEG-2 video stream.

The CherryPicker enhancements mark the first time an operator can insert a graphic overlay without taking the signal down to baseband, according to the company.

At a Glance: Graphics Go Native
Terayon is introducing three applications for its flagship CherryPicker platform:
Source: Multichannel News research
Static graphic overlay: Allows for insertion of a “station bug” that sits in the corner of the screen to brand the channel.
Motion graphic overlay: Such as a stock-ticker crawl or an emergency weather alert on bottom of screen.
SqueezeBack: Shrinks video picture on horizontal or vertical axes, or on both, to support an “L-bar” with on-screen advertising or other data.

“This creates a much more cost-effective way of creating these services,” Terayon product marketing chief Buddy Snow said.

The applications can splice specified graphics into one or more channels, at times set by the operator. Those can include a static-graphic overlay, such as a station logo that sits in the bottom right-hand corner of the screen, or a motion-graphic overlay, such as a stock-ticker crawl.

A third application, called SqueezeBack, reconfigures the video into a smaller space — either on the horizontal or vertical axes, or both — to allow graphics to be inserted at the edge of the picture.

SqueezeBack lets an operator insert an “L-bar” into a channel, with data filling the screen that could include advertising, weather or other local information. The information can be different based on the neighborhood, ad zone or market, according to Snow.

“It’s a very sophisticated effect — you can start to subdivide the screen real estate to use it for different purposes,” he said.

DEALING CARDS

The applications run on Terayon’s DM 6400 Network CherryPicker and require installing a digital signal processor (DSP) hardware card, as well as upgrading the system to firmware to version 5.0. Also required: A character-generator device to stream the motion graphic for overlay to the DM 6400 via a serial digital interface on the card, which includes DSP chips supplied by Texas Instruments.

Terayon said a CherryPicker fully equipped with two DSP cards can process up to 16 unique channels, using a combination of static or motion graphic overlays or SqueezeBack applications.

Pricing depends on number of channels and which application a customer plans to use. For example, excluding the price of a CherryPicker, the DSP card and license for inserting motion graphics into one channel will run $20,000, Snow said.

“The point is, it’s not a couple hundred thousand dollars,” he said. “The analog equipment to do this the traditional way would cost far more than that.”

Moreover, by handling graphics insertion within the native digital format, an operator doesn’t risk degrading the quality of the picture when it is decoded to baseband, then back to MPEG format, Snow said.

Terayon said the new applications are being beta-tested by six cable customers, but Snow wouldn’t name them.

The graphics-overlay applications had their origins in a project Terayon developed for the Fox broadcast network, which wanted to provide its 197 affiliates with the ability to put the local station’s logo on high-definition feeds.

Programmers are “selling HD on quality of the picture, and the quality is definitely going to suffer if you decompress and then recompress the signal,” Snow pointed out.

EARNINGS RESTATED

Terayon hasn’t made much marketing noise since it disclosed in November 2005 that it was reviewing its revenue-recognition policies and how they affected financial reports going back to 2000.

The company is rumored to be up for sale, with potential bidders said to include Cisco Systems, Motorola and Harmonic (see “Tip Sheet,” page 40).

In late December 2006, the company filed restated financial results for its previous five fiscal years with the Securities and Exchange Commission. Terayon said an independent audit committee concluded that certain revenues were recorded in incorrect periods, although it added that the employees responsible followed what they understood to be the applicable rules at the time.

 

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