Ulead's New Product Managers?

[Jerry Jones]

Does anybody know who is the Ulead MediaStudio Pro product manager in the United States?

(Former product manager Travis White moved to Pinnacle.)

Does anybody know who is the Ulead PhotoImpact product manager in the United States?

(Former product manager Colwin Chan has left the company and I'm not sure where he went.)



Jerry Jones

http://www.jonesgroup.net

[Hulk]

I can't answer your question but I worked with Travis at NAB'04 and he is a really talented guy. It's a shame he isn't with Ulead anymore.

- Mark

[Jerry Jones]

Travis is a nice guy and a hard worker and Pinnacle is lucky to have him.

Colwin Chan is also a terrific person; I'm sorry I've lost track of him.

I ate lunch with several of the Ulead people at the "Joe's Crab Shack" in Torrance, which is located right on the beach.

Great food and we watched the seals in the ocean as we ate.

It was cool.

Jerry Jones

http://www.jonesgroup.net

[Brian Ellis]

Some of the best guys are disappearing in Taiwan, as well. Just had news that the WS PM is moving. Almost inevitable that clashes occur after a takeover.

[Jerry Jones]

Well -- and I have no way of knowing what the future holds -- if the worst comes to pass -- and Intervideo decides to cease development of MediaStudio Pro, then I guess we'll all have to figure out where to go next in two or three years.

Maybe Intervideo will continue to cater to the MediaStudio Pro market.

Maybe Intervideo will abandon that particular market.

I think version 8 of MediaStudio Pro is going to last many users for several years.

However, when people make the move to AVCHD, then a decision might have to be made to use a different NLE, if Intervideo fails to support MediaStudio Pro users.

In that case, my picks -- in order -- would be as follows:

1. APPLE Final Cut Pro
2. SONY Vegas
3. ADOBE Premiere
4. AVID Xpress Pro

That's right.

I'd put Avid at the bottom.

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

News release dated July 5, 2006 from Intervideo:

http://tinyurl.com/mw97j

"InterVideo®, Inc. (NASDAQ: IVII) and its partner Ulead® Systems, Inc. (TSE:2487) an industry leader in next-generation DVD and multimedia software, announced today that its Taiwan branch, InterVideo Digital Tech, and Ulead Systems (TSE:2487) will be officially merged."

"InterVideo Taiwan acquired the remaining shares of Ulead Systems Inc. in order to consolidate resources efficiently, reduce operational costs, and enhance operational efficiency."

"InterVideo currently owns 67 percent of Ulead and will pay NT$30 per share to buy back the remaining 33 percent of shares from Ulead shareholders."

Microtek -- the scanner company -- was, I think, one of the big shareholders of Ulead.

So it would appear Microtek is now out of the picture.

Intervideo needs to get its act together, however.

Mr. Ro -- if you're reading this -- we'd like to know where these product lines are going.

Thanks.

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

Interesting statements in Intervideo's SEC filings:

"The market for our products is characterized by rapid changes in technology."

"Demand for our products depends on our ability to maintain competitive pricing and to provide new or improved products that keep up with changes in technology."

"Any evaluation of our business and prospects must be made in light of the risks and difficulties encountered by companies offering products or services in new and rapidly evolving markets."

"The market for software-based digital video and audio solutions for incorporation in products in the PC and consumer electronics industries is rapidly evolving, and it is difficult to forecast the future growth rate, if any, or size of the market for our products."

"For example, our future growth will depend on our ability to compete in emerging and rapidly growing markets, such as multimedia home networking, high definition DVD, Blu-ray Disc and multimedia mobile phone markets."

"We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts."

"In addition, our acquisition of a controlling interest in Ulead has made it more difficult to make accurate financial forecasts."

"Our current and future expense levels are based largely on our investment plans and estimates of future revenue and are, to a large extent, fixed."

"As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which would harm our operating results."

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

More:

"We have created, and intend to continue to create, new software and software bundles such as WinDVD Creator, InterVideo Home Theater, InterVideo DVD Copy, MediaOne and InterVideo InstantON."

"Our recent acquisition of a controlling interest in Ulead has accelerated this trend with the addition of their products, including PhotoImpact, VideoStudio, DVD Movie Factory, DVD Workshop and Media Studio Pro."

"These products contain advanced features and functionality that have required and may continue to require us to provide an increased level of end-user support."

"In the future, as these new products become more complex, we may also be obligated to provide additional support to our OEM customers to bundle our software with their products."

"These potential increases in OEM and end-user support obligations could require us to defer both license and PCS revenues to future periods, which could harm our operating results and adversely impact our ability to accurately forecast revenue."

"We expect prices for our existing products to continue to decline over the next few years."

"Because of competition from other software providers, competition in the PC industry and diminishing margins experienced by PC OEMs as a result of decreased selling prices and lower unit sales, we have reduced the prices we charge PC OEMs for our WinDVD product, WinDVD Creator and other products."

"We expect this trend to continue, which will make it more difficult to increase or maintain our revenue and may cause a decline in our gross profits, even if unit sales of any particular product increase."

"If unit sale increases do not offset anticipated price declines, our revenue will decline."

"In addition, our gross profit may decline as a result of the Microsoft royalty revenue which is sold at cost."

"Our future success will depend in part on our ability to increase sales of our higher-margin products and to introduce and sell new products and upgrades to our existing products, which could increase our revenue and could improve our profit margins."

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

And this:

"We did not achieve profitability until the fiscal year ended December 31, 2002."

"As of March 31, 2006, we had retained earnings of $11.2 million."

"We expect to incur significant operating expenses over the next several years in connection with the continued development and expansion of our business."

"These expenses include research and development and marketing expenses relating to products that may not be introduced and will not generate revenue until later periods, if at all."

"We may also incur significant operating expenses associated with the enforcement of our intellectual property rights."

"Further, our recent acquisition of Ulead makes it more difficult for us to predict profitability on a quarterly or annual basis."

"We may not achieve profitability on a quarterly or annual basis in the future."

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

This is interesting:

"We may not realize the benefits from our recent acquisition due to challenges associated with integrating the operations, technologies, sales and other aspects of the our business with the Ulead business."

"On April 20, 2005, we acquired, directly and though one of our wholly owned subsidiaries, 33,284,395 shares of Ulead Systems, Inc. (“Ulead”) a publicly traded Taiwanese company at 30 NT (US$0.95) per share pursuant to our previously-announced tender offer for the issued shares of Ulead and pursuant to stock purchase agreements with certain shareholders of Ulead."

"Also on April 20, 2005, we acquired an additional 1,000,000 shares of Ulead at a purchase price of 30 NT (US$0.95) per share through the acquisition of a holding company, Strong Ace Limited."

"The aggregate purchase price for the 34,284,395 shares of Ulead was US $32.6 million and was paid in cash."

"Together with the shares that we purchased prior to the tender offer, we now own a total of 48,817,395 shares of Ulead, or approximately 65% of the issued shares of Ulead."

"This has been our most significant corporate acquisition to date."

"Our future success will depend, in large part, on management’s success in integrating the operations, technologies and personnel of our business with the Ulead business."

"If we fail to integrate the operations of Ulead into our business successfully or otherwise fail to realize any of the anticipated benefits of the acquisition, our results of operations could be impaired."

"In addition, the overall integration of the two companies may result in unanticipated operational problems, expenses and liabilities, and diversion of management’s attention."

"For example, we were unable to obtain audited financial statements for the Ulead business in a timely manner resulting in delays in the timing of certain of our public filings."

"If we are unable to anticipate and address future challenges related to the integration of the Ulead business into our business, our results of operations could be negatively impacted by such challenges."

"If Microsoft develops or licenses digital video and audio solutions that compete directly with ours, our business could suffer."

"Microsoft currently offers products in the digital video and audio software markets."

"Some video and audio capabilities are built directly into their operating systems or are offered as upgrades to those operating systems at no additional charge."

"During the second quarter of 2005, we granted to Microsoft, Inc. a worldwide right and license to use, copy, create derivative works of, publicly perform or display, import, broadcast, transmit, offer to sell, sell, have sold, rent, lease, lend, transfer or otherwise distribute certain key components of our DVD, audio and video decoding technology."

"If Microsoft develops or licenses digital video and audio solutions that compete directly with ours and incorporates the solutions into its operating system, or otherwise changes its operating system to render our products incompatible, our revenue could decline significantly and our business could be harmed."

"We depend substantially on our relationships with Hewlett-Packard and a small number of PC OEMs, and our failure to maintain or expand these relationships would reduce our revenue and gross profit or otherwise harm our business."

"The PC industry is highly concentrated, and we have derived a substantial portion of our revenue from sales of our products to HP and a small number of PC OEMs."

"For the three months ended March 31, 2006, our three largest customers accounted for 52% of our revenue, with Hewlett-Packard accounting for 26%, Microsoft accounting for 14% and Toshiba accounting for 12% of our revenue."

"However, our revenue from HP has declined beginning in the fourth quarter of 2005 and into 2006 because we have been informed by HP that they will not incorporate certain of our products into certain future HP notebook models."

"A significant decrease in revenue from HP, or the loss of any of our large customers without an offsetting increase in sales from other customers, would reduce our revenue and gross profit and otherwise harm our business."

Man -- they're in a tough business, it would seem.

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

Also interesting:

"Our primary competitors are Adobe Systems Incorporated, Cyberlink Corporation, RealNetworks, Inc and Sonic Solutions, Inc."

Jerry Jones

http://www.jonesgroup.net

[Jerry Jones]

By the way, here are several New York City photos of Ulead Chairman Steve Ro:

http://tinyurl.com/rl9ck

Pretty cool pictures, eh?

Jerry Jones

http://www.jonesgroup.net

[Brian Ellis]

What investor would put a penny into IV after reading those statements? It sounds like their mighty overstretched.

[htchien]

Travis and Colwin left Ulead a year ago. God, it seems a long time ago!!

Ulead is still there, at least for now.

The future for Ulead is good or bad? Maybe time will tell, but I always see changes as good chances to improve something.

It's still good to see you guys. Hope you all are well.

H.T.

[Jerry Jones]

Hi H.T.,

Good to hear from you again. It's nice to know you're still there.

Jerry Jones

http://www.jonesgroup.net