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Microsoft teams with Intervu
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December 20, 1999: 4:42 p.m. ET
Alliance to focus on broadband Internet media delivery, using Windows streaming
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NEW YORK (CNNfn) - Microsoft teamed up Monday with Intervu Inc. in a partnership aimed at expanding the use of streaming media that uses Microsoft’s Windows Media platform.
Expanding on an existing relationship, Microsoft (MSFT) said it will invest $30 million in Intervu (ITVU), which develops technology that enables Web site operators to deliver streaming audio and video content over the Internet.
Under the terms of the deal, Microsoft will purchase shares of a new series of Intervu preferred stock, which is convertible to common shares at a price of $90, Intervu said.
In return, Microsoft gains a partner in the fast-growing market for streaming media on the Internet through which it will further promote the use of its digital media format.
Shares of Intervu soared on the news, closing 26-7/8 higher at 114-7/8, according to preliminary data, after reaching a high of 124 earlier in the session. Microsoft, meanwhile, fell 2-1/2 to end at 112-3/4.
The Redmond, Wash., software giant has been focusing a lot of its efforts on further developing and marketing its Windows Media Player in an ongoing battle with rival RealNetworks (RNWK), which, with its RealPlayer software, currently holds the leading position, garnering roughly 85 percent of the market.
The partnership will give a strong boost to Intervu’s market profile and solidify its position as a leading provider of broadband content delivery services, according to Paul Merenbloom, an analyst at Prudential Securities in New York.
"We expect ITVU’s visibility and brand value will increase substantially over the coming years, complementing the company’s technical strengths and further cementing ITVU as ‘the’ broadband content services company,” Merenbloom said in a research note to clients.
The San Diego-based company, which lists media outfits such as NBC, CNN and CNet among its clients, posted revenue of $3.2 million and a net loss of $7.4 million during the quarter ended Sept. 30.
Merenbloom, who has a "strong buy” rating on Intervu’s stock and is currently reviewing a 12-month price target, said he expects the company to break even during the second quarter of 2002.
"As an expansion to the current relationship between Microsoft and Intervu, we believe Microsoft views Intervu as an integral component to the forthcoming move to broadband,” Merenbloom said. "Accordingly, we expect Intervu shares may carry a premium in the marketplace as investors begin to realize the potential of the next generation of the Internet wave.” 
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