Roku shares drop after weak earnings outlook

Shares of Roku that manufactures streaming media players and is incorporated in some TVs saw its shares drop more than 20 percent on Thursday morning.

Roku

Roku was founded back in October of 2002 by Anthony Wood. Roku means "six" in Japanese. Roku was the sixth company that Wood had founded.

The company rose to prominence with its streaming stick that plugs into a USB port. Roku is available in Canada as well as the U.S.

Roku forecast weak first quarter of 2018

The sharp drop was due to a weaker-than-expected forecast for the first quarter of this year.

Roku predicted that it will bring in $120 to $130 million in revenue for the quarter whereas the estimate of Wall Street was $132 million. However, the company's prediction took into account a new revenue recognition standard which may have had an impact on its figures it said when releasing its earnings forecast.

Roku still did well last quarter

In spite of the weaker forecast Roku actually beat Wall Street earning estimate last quarter. It had adjusted earnings of $0.06 per share on revenue of $188.3 million. Analysts had estimated it would lose $0.10 on revenue of just $182.5 million.

Roku stock went public last September and has tripled in value since then but as of Thursday it was $40.39 per share down 23.18 percent this year. It remains to be seen if the company can boost its earnings during following quarters but right now investors appear not to have confidence in the firm.

Previously published in Digital Journal

Roku to offer a new free channel on all its devices

Roku which has a number of different streaming media players and also is built into what are called Roku TVs will offer a new free channel that will have no-cost content from existing channels plus new material.

The best free material on Roku will now be available in one channel. For those who are not familiar with Roku it is described by Wikipedia as follows:

The Roku Streaming Player, or simply Roku.. is a series of digital media player set-top boxes manufactured by Roku, Inc. Roku partners provide over-the-top content in the form of channels. The name comes from the Japanese word 六 (roku) meaning "six" and was named so because it was the sixth company that Anthony Wood (CEO 2002-) started.[2][3] A Roku streaming device gets data (the video stream) via a wired or Wi-Fi connection to an Internet router. The data is output via an audio cable, video cable, or HDMI cable. The device can be connected to any television set (or other video display device) with appropriate input connections.Since 2014 the company has also a type of smart TV which uses the Roku interface as the "brain" of the TV. A number of different firms manufacture the TV including TCL and Hisense with RCA also joining the group as discussed in a recent Digital Journal article.

As well as aggregating no-cost content on existing Roku channels the new channel will also offer movies from partners that include MGM, Sony, Warner, and Lionsgate. Roku offers numerous free channels but also has many channels that require some type of fee. The free channels often have advertising but not all of them. I use Roku on one of two TVs I have but do not have cable on either TV. On the second TV I connect an old laptop to the Internet and then run content through an HDMI cable to the TV. The Roku player also can connect through an HDMI cord. As many TV's now have several HDMI ports, you can keep a computer and other devices connected as well as the Roku player. I have a laptop connected to the same TV as my Roku player. It is good for playing content that you have on a USB stick, external hard drive, a CD or DVD. You can keep your cable if you wish. Being frugal, aka "cheap", I cut the cord some time ago. Roku media players are widely available in Canada for around fifty dollars Canadian and even less for the lower end models. They are quite adequate if you have an older TV or a newer one with no special features.

Chief Marketing Officer of Roku, Matthew Anderson said: "We're at our best when helping a family's entertainment dollar go just a bit further. There are no subscriptions, logins or fees, and everything is in one place." To activate the Roku service you must open an account. However, unless you decide to subscribe to some of the channels that charge a fee there are no charges made to your account. The new channel will have movies with titles such as "Legally Blonde", "Up in the Air" , the Karate Kid" , "Monster" and "Ali". Titles will rotate in and out of the channel. Anderson claims that though the service is supported by ads there will be only about half the time spent on ads as on regular TV. He also says that the ads will be relevant and non-repetitive. Roku is not intending to launch its own original content at this time as Netflix has done. Netflix and several other services can be viewed on Roku if you have a subscription. Indeed Netflix has its own special button. The new channel is to be available on streaming devices in the US beginning today. There is no mention of whether it will be available in other countries such as Canada.

Often Netflix content available in the US is not available in Canada and other countries. This has resulted in many non-Americans using VPN's to disguise their addresses and using the US Netflix which has a great variety of material. However, Netflix has cracked down on this practice as noted in thisGlobe and Mail article. Roku in Canada also cannot stream some content that would be available in the US. However, I have found that there is a wide choice of material available here. Even if one does not subscribe to Netflix there are a number of full length movies available on You Tube and there are several free movie channels on Roku in Canada already.

Roku is planning on an initial public offering (IPO) worth $100 million dollars. The stock will list on Nasdaq with the symbol "ROKU". Roku needs an injection of funds as it spends heavily on research, marketing, and staff. In 2016 it had revenue of $398.6 million a significant increase of 25 percent over 2015. Net loss in 2016 was $42.8 million. Almost three quarters of its revenue came from selling its media players. The offering is backed by Twenty-First Century Fox, Fidelity, and Menlo Ventures. The IPO will be underwritten by Morgan Stanley, Citigroup, RBC, and others. The offering should provide the funds needed for Roku's further development.

RCA launches new Roku TV's adding to the competition

Roku TVs are smart TVs in that they have built into them the functions of the Roku streaming player which makes available many channels, some free but others paid.

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The Roku is a streaming media player. It takes content from the Internet and displays it on your TV. There are several different Roku models that differ in performance features and price. All models are able to access the 3500 Roku channels it streams. The Roku service will work with any existing cable system or you can use it as an alternative to cable. There are a wide selection of free services but also subscriptions to Netflix, Hulu, etc. If you already have subscriptions you can view them without further charge through Roku. You have access to other sources such as Amazon Video, and Google Play but there will be charges for that.

Roku TV is a type of smart TV which incorporates the functions of the Roku media player within the TV itself so no independent Roku player is needed. The Roku TV will provide you to access to all your entertainment sources such as a game console, or streaming channels such as Netflix and You Tube from a single interface. There are various manufacturers of Roku TVs with varying prices, screen sizes, and picture resolution.

If you are in the market for a budget priced TV then a Roku TV is worth considering. However, there are other ways you can have content displayed on your TV from the Internet. You can simply use a laptop or desktop that is connected to the Internet and connect through an HDMI cable or with some older TV's and computers a VGA cable plus an audio cable. You can use the TV as if it were a monitor for the computer. although the sound will come through the TV.

Alternatively, if you have an older type TV that does not connect to the Internet, you can simply purchase one of the several models of Roku media players. A decent Roku player can cost fifty dollars (Canadian) or even less. You will have the same advantages as if you had a Roku TV except that you will have the extra of the player that must be connected to your TV. It can be separately powered through an adapter plugged in to a regular outlet. It can also be powered by being plugged into a USB outlet if there is one in your TV. You will need an HDMI port in your TV. The appended video shows how to install one model of the Roku.

Before, RCA entered the field manufactures such as Haier, Hisense, Insignia, Sharp and TCL already were actively producing Roku TVs indicating the popularity of the Roku streaming operating system (OS). Big brands such as Samsung and LG have their own proprietary systems and Sony and Vizion use Google Android TV or Google Cast as platforms.

Consumer reports has an evaluation of many Roku TVs here. The review praises the relative cheapness of the TVs and the relative ease with which they can be set up including an on-screen tutorial. The review notes: "In fact, everything we like about the Roku platform—a wealth of content options, an easy-to-use interface, and a universal search capability that doesn't favor content from one service over another—is now baked into the TV itself. " All the devices you have connected to the TV show up on the screen as apps. To use any of the devices you just click on the app icon and the TV connects to the app. An advantage of having the Roku within the TV is that you do not need two remotes, one for the player and one for the TV. However if you still have a cable box, you will still need a remote for that.

The report found that Roku OS is not ideal as a TV interface. You need to sign into or set up a Roku account before you can use your set. The review also notes: "Once you're logged in, the TV updates its apps, which can often be a lengthy process. And when you turn on the TV, it defaults to the Roku home screen, not live TV as most sets do. To watch any programming, you have to select the appropriate app from the tier of onscreen tiles." It may take a while for a user to learn how to use every feature of the TV. There are a few differences in the remote as well. The volume controls are usually on the top of the remote but the Roku TV remote has them at the side. A You Tube review of the economical 50 inch LCT Roku TV is appended.

The RCA line of Roku TV has HD but no 4k. A 50 inch TV is priced at $499, a 43 inch at $380, and a 32 inch at just $250. The TV's are said to be available at Amazon and Walmart as well as several other retailers. Some apparently are already being marked down in price, no doubt to compete with other manufacturers. The TCL brand is quoted in a CNET article as selling at $170 dollars for the 32 inch model, $300 for the 40 inch and $350 for the 49 inch. I assume those prices are in US dollars. If you are in the market for a new TV and perhaps want to cut the cord on your cable connection you might look seriously at the new Roku TV's available from many manufacturers.