Synacor Inc.’s shareholders have been on a wild ride since the Buffalo Internet content provider went public 15 months ago.
Its stock skyrocketed out of the gates, more than tripling in value by early July, only to plummet as stock promoters who had fueled the initial spike backed away, and insiders became free to start selling some of their own shares. Then came the news in February that Synacor’s rapid revenue growth, which had seen the company’s sales more than double from 2009 to 2012, was slowing to a virtual halt, partly because of changes in the new Windows 8 operating system.
Microsoft made its Bing search engine the default search provider and set its MSN site as the home page on computers using Windows 8. That change relegated the start pages that Synacor designs for its customers, such as computer makers Toshiba and Lenovo, along with a handful of cable television providers, to a secondary tab on those computers’ Internet browsers.
The change hurt Synacor because the company generates revenue every time a subscriber uses the Google search box on the start pages that it designs, while a reduction in page views also hurts Synacor’s advertising sales on those start pages.
Analysts now are forecasting that Synacor’s revenues will inch up by about 2 percent this year and then start growing a little faster – by about 7 percent – in 2014. But Ronald Frankel, Synacor’s president, thinks the company has the products and services that can put it back on the fast-growth track.
“This year, we’re stable, and I certainly hope we’ll return to growth in a reasonable amount of time,” Frankel said following the company’s annual shareholder’s meeting Thursday. “We have a rich pipeline.”
Its TV Everywhere system is gaining acceptance, including the addition earlier this month of Verizon’s FiOS TV as a major customer. The company also has launched a Cloud ID offering that lets Synacor customers access the content from TV Everywhere with the same login that they use on social media sites such as Facebook and Twitter. Synacor demonstrated the Cloud ID service at a conference organized by Google this week.
And the company also is working on new products aimed at customers with smartphones and touch-screen devices. “I think there’s a tremendous opportunity to provide our services on mobile devices,” Frankel said.
He noted that Synacor has focused primarily on the personal computing world and is now moving into mobile, developing products that consumers can use on their smartphones, tablets and other electronic devices.
“We think there’s tremendous potential to grow this business on the mobile side,” he said.
And grow is what Synacor has done, with its sales jumping from $61 million in 2009 to $122 million last year. Its staff has grown to a total of 292 people at its Buffalo office near the waterfront, with a payroll that now tops $22 million.
“We have no customers in Buffalo. All the revenue we generate in Buffalo comes from outside Buffalo,” said Jordan Levy, the local venture capitalist who is Synacor’s chairman.
But Synacor is having some serious growing pains now. Its stock, which went public in February 2012 at $5 and shot as high as $18 in mid-July, has plunged since then and now trades well below its initial public offering price. The shares closed down 13 cents, or 3.41 percent, on Thursday at $3.68.