STB is a device that connects to a television and an external source of signal, converting signals into content, which is then displayed on the television screen.

NDS creates the security and enabling technologies as well as the interactive applications that allow operators to generate revenues by delivering digital content to TVs, STBs, Digital Video Recorders, PCs, mobile phones, portable media players, removable media and other devices.

Local Direct-to-Home players, like Tata Sky and Dish TV do not manufacture STBs. While the Tata Sky sources it from local STB makers, Dish TV imports the device from Taiwan.

The demand for STBs is set to go up further once cash-rich companies like, Reliance and Bharti, venture into the area. Quality supply of STB - with good distribution and support is critical for the development of the market, she said.

Commenting on NDS's performance, Dr. Abe Peled, Chairman and Chief Executive Officer of NDS said, "This has been another good quarter for NDS. We are particularly pleased with our continuing progress on entering the German pay-TV market, and our additional wins in India. Our CA contract extension with Viasat and expanding the relationship to include our MediaHighway(R) middleware are also gratifying and clear evidence of our focus on customer support. We continue to invest in our business to support our customers and offer them the technologies and business solutions to allow them to remain competitive in the evolving media distribution landscape."

    KEY FINANCIAL MEASURES
                                   For the Three Months   For the Nine Months
                                           Ended                 Ended
                                          March 31,              March 31,
                                     2008          2007    2008          2007

    Revenue (in thousands)          $213,301   $178,391   $633,125   $507,615
    Operating income
     (in thousands)                  $43,304    $35,782   $151,100   $117,772
    Operating margin                      20%        20%        24%        23%
    Net income (in thousands)        $36,293    $29,224   $122,956    $94,603
    Diluted net income per share       $0.62      $0.50      $2.09      $1.63



    KEY NON-FINANCIAL MEASURES
                                   For the Three Months   For the Nine Months
                                           Ended                 Ended
                                          March 31,              March 31,
                                       2008       2007        2008      2007

    Smart card deliveries (in millions)
    Quantity delivered in period        10.6      6.4        26.9      19.6

    Authorized cards (in millions)

    Additions                            4.2      3.0        11.5       7.9
    Number of authorized cards,
     end of period                      86.9     72.9        86.9      72.9

    Middleware clients deployed
     (in millions)
    Acquisitions                           -        -           -       2.0(1)
    Additions                            6.7      5.1        21.3      13.7
    Cumulative deployments,
     end of period                      83.1     57.3(1)     83.1      57.3

    DVR clients deployed (in millions)
    Net additions                        1.7      1.1         4.8       2.9
    Cumulative deployments,
     end of period                      12.1      6.4        12.1       6.4

    Employees
    Full-time equivalents, end of period                    3,886     3,460


     (1) Includes 2.0 million OpenRG(TM) residential gateway middleware
         devices developed and deployed by Jungo that were recognized at the
         time of the acquisition of Jungo on December 31, 2006.


    KEY DEVELOPMENTS
    -- Premiere has selected NDS's VideoGuard(R) conditional access system to
       secure its satellite pay-TV platforms in Germany and Austria - another
       major success for NDS in Germany. Migration from Premiere's incumbent
       provider will begin in calendar Q2 using customer-friendly simulcrypt
       technology. All new Premiere receivers will be equipped with
       VideoGuard. News Corporation beneficially owns a minority interest in
       Premiere.
    -- New pan-Indian cable network operator, DEN Digital Entertainment
       Network, has chosen NDS's VideoGuard conditional access system,
       MediaHighway middleware and customized electronic program guide to
       secure and enhance its new digital cable service.
    -- The Tele Columbus Group, Germany's third-largest cable operator, has
       chosen VideoGuard to protect its independent networks. Tele Columbus
       will use a simulcrypt solution to support the launch of the new
       platform. Tele Columbus Group serves some 3.7 million cable-connected
       households, as well as a large number of satellite-facilitated
       independent networks, making it one of Germany's biggest multimedia
       service providers.
    -- CANAL+ GROUP has deployed the latest generation of NDS' MediaHighway
       middleware to allow subscribers to easily transform their HD set-top
       boxes into HD DVRs. CANAL+ and CANALSAT subscribers in France can now
       add an external hard drive via the USB port on their HD set-top box to
       have a fully functional HD DVR. CANAL+ has also deployed NDS'
       MediaHighway to support its latest dual-tuner HD set-top box.
    -- Hathway, India's leading provider of digital cable services, has chosen
       NDS XTV(TM) to launch the first cable DVR in India.
    -- Scandinavia's Viasat Broadcasting has extended its contract with NDS to
       provide NDS's VideoGuard conditional access system to secure its
       digital premium pay-TV satellite platform. Additionally, a second new
       agreement covers the supply of NDS's MediaHighway middleware,
       customized electronic program guide and XTV DVR technology in support
       of Viasat's recently announced HD satellite pay TV service.

FINANCIAL REVIEW

Total revenue for the three-month period ended March 31, 2008 was $213.3 million, an increase of 20% over the corresponding period of the previous fiscal year. For the nine-month period ended March 31, 2008, revenue was $633.1 million, an increase of 25% over the corresponding period of the previous fiscal year.

Revenue from conditional access increased by 21% and 25% during the three- and nine-month periods ended March 31, 2008, respectively, as compared to the three- and nine-month periods ended March 31, 2007. The increases were principally due to recognition of a portion of security services revenue previously deferred as certain remaining revenue recognition criteria were satisfied during the three- and nine-month periods ended March 31, 2008. Additionally, conditional access revenue rose due to the growth of the subscriber base of our customers, as well as an increase in customers and a higher volume of smart cards delivered to customers. Integration, development and support revenue increased by 93% in the three-month period ended March 31, 2008 and decreased by 1% in the nine-month period ended March 31, 2008 as compared to the three- and nine-month periods ended March 31, 2007, respectively. The recognition of revenue from new customers and from the delivery of enhancements to several of our major customers is dependent on the timing of satisfaction of all revenue recognition criteria; therefore, this component of revenue may fluctuate from period to period. The increase in integration, development and support in the three-month period ended March 31, 2008 was due to the acceptance of a series of enhancements delivered to existing customers. License fee and royalty revenue increased by 13% and 18% in the three- and nine-month periods ended March 31, 2008, respectively, as compared to the three- and nine-month periods ended March 31, 2007, principally resulting from higher conditional access revenue and EPG royalties due to a higher number of set-top boxes deployed. Middleware royalties are driven by the number of middleware clients deployed, the number of which is disclosed in the table above. The increase in revenue from new technologies of 7% and 41% in the three- and nine-month periods ended March 31, 2008, respectively, compared to the three- and nine-month periods ended March 31, 2007, was principally due to higher revenue from our advanced middleware, IPTV, gaming applications and residential gateway devices. Revenue from our DVR technologies and advanced middleware is driven by the number of DVR clients deployed (disclosed in the table above) and the level of integration and development revenue recognized.

Cost of goods and services sold increased by 23% and 22% during the three- and nine-month periods ended March 31, 2008, respectively, as compared to the three- and nine-month periods ended March 31, 2007, principally due to an increase in the number of our employees working on development, integration and support activities, as well as increased royalties paid to third parties for the use of their technologies and higher deliveries of smart cards during the periods. The increases were partially offset by lower smart card unit costs.

Our main operating expenses are employee costs (including the cost of equity-based awards), facilities costs, depreciation, travel costs and legal expenses. Our main operating expenses have increased primarily due to a higher number of employees, facilities expenses and legal costs. Employee costs were approximately 28% higher in U.S. dollar terms during both the three- and nine- month periods ended March 31, 2008 as compared to the corresponding periods of the prior fiscal year.

Research and development costs increased by 2% and 18% for the three- and nine-month periods ended March 31, 2008, respectively, as compared to the three- and nine-month periods ended March 31, 2007, principally as a result of a higher number of employees working on an increased number of projects. Sales and marketing expenses increased by 17% and 29% in the three- and nine-month periods ended March 31, 2008, respectively, as compared to the three- and nine-month periods ended March 31, 2007, principally as a result of higher employee headcount and travel costs, increased attendance at trade shows and a higher level of corporate communications activities. During the three- and nine-month periods ended March 31, 2008, general and administrative expenses increased by 66% and 48%, respectively, as compared to the corresponding periods of the previous fiscal year, principally due to increased legal expenses, as well as equity compensation costs and facilities and infrastructure costs.

As a result of the factors outlined above, and, in particular, the increase in conditional access and new technologies revenue, operating income was $43.3 million, or 20% of revenue, for the three-month period ended March 31, 2008, compared to $35.8 million, or 20% of revenue, for the three-month period ended March 31, 2007. Operating income was $151.1 million, or 24% of revenue, for the nine-month period ended March 31, 2008, compared to $117.8 million, or 23% of revenue, for the nine-month period ended March 31, 2007.

We estimate that the weaker U.S. dollar increased our revenue by approximately $21 million and increased our operating income by approximately $15 million in the nine-month period ended March 31, 2008 compared to what would have been achieved had foreign exchange rates been consistent with those prevailing in the corresponding period of the prior fiscal year. Similarly, for the three-month period ended March 31, 2008, we estimate that the weaker U.S. dollar increased our revenue by approximately $5 million and our operating income by approximately $4 million.

As of March 31, 2008, we had cash and cash equivalents totaling $696.2 million. Our accumulated cash is being held with the intention of using it for the future development of the business and there are currently no plans to pay any dividends to shareholders. During the nine-month period ended March 31, 2008, cash from operating activities was $99.1 million and we paid a net $10.5 million in respect of business acquisitions. We had a net inflow of cash of $86.0 million in the nine-month period ended March 31, 2008, compared to $195.5 million in the nine-month period ended March 31, 2007. During the nine-month period ended March 31, 2007, short-term investments of $184.4 million matured and we did not reinvest such funds.

FOREIGN EXCHANGE RATES

    Average foreign exchange rates used in the year-to-date results are as
follows:
                                                   For the Nine Months Ended
                                                            March 31,
                                                      2008            2007

    U.K. Pounds Sterling/U.S. Dollar                  $2.014         $1.914
    Euro/U.S. Dollar                                  $1.438         $1.291
    Israeli Shekel/U.S. Dollar                        $0.255         $0.239
    Indian Rupee/U.S. Dollar                          $0.025         $0.022

ABOUT NDS

NDS Group plc (Nasdaq: NNDS), a majority-owned subsidiary of News Corporation, supplies open end-to-end digital technology and services to digital pay-television operators and content providers. See www.nds.com for more information about NDS.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This document may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market, regulatory and other factors. More detailed information about these and other factors that could affect future results is contained in our filings with the U.S. Securities and Exchange Commission. Any "forward-looking statements" included in this document are made only as of the date of this document and we do not have any obligation, nor do we undertake, to publicly update any "forward-looking statements" to reflect subsequent events or circumstances, except as required by law.

CONFERENCE CALL

Dr. Abe Peled, Chairman and Chief Executive Officer, and Mr. Alex Gersh, Chief Financial Officer, will host a conference call to discuss this announcement and answer questions at 9.00 a.m. New York time (2.00 p.m. London time) on Thursday, May 1, 2008.

    Dial-in
    U.S. toll free:                            1 866 832 0717
    U.K. freephone:                             0800 953 0844
    International dial-in:                +44 (0)1452 562 716

    Replay (available until May 6, 2008)
    U.S. toll free replay:                     1 866 247 4222
    U.K. freephone replay:                      0800 953 1533
    International replay:                 +44 (0)1452 550 000
    Replay passcode:                       42914168#

The live webcast and conference call will be available at: http://investor.shareholder.com/nds/webcasts.cfm starting at 9.00 a.m. New York time (2.00 p.m. London time) on Thursday, May 1, 2008. Please register for the event now by clicking on the 'Third Quarter Results 2008' link on that page. For those of you who are not able to attend this live broadcast online, the presentation will be recorded and available for viewing on the same page three hours following the original broadcast.

An audio replay will also be available on www.nds.com from 7.00 a.m. New York time (noon London time) on May 2, 2008.

                                 NDS Group plc
              Unaudited Consolidated Statements of Operations

                           For the three months       For the nine months
                              ended March 31,          ended March 31,
    (in thousands, except
      per-share amounts)     2008         2007         2008         2007

    Revenue:
      Conditional access  $123,510     $101,655     $364,504     $292,686
      Integration,
      development & support 14,134        7,338       37,887       38,433
      License fees &
       royalties            30,675       27,122       88,680       74,922
      New technologies      43,781       40,953      137,621       97,374
      Other                  1,201        1,323        4,433        4,200

    Total revenue          213,301      178,391      633,125      507,615

    Cost of goods and
     services sold        (86,817)     (70,573)    (236,759)    (193,926)

    Gross margin           126,484      107,818      396,366      313,689

    Operating expenses:
      Research &
       development        (46,695)     (45,638)    (145,746)    (123,613)
      Sales & marketing   (12,714)     (10,912)     (36,376)     (28,203)
      General &
       administration     (20,440)     (12,284)     (53,198)     (35,972)
      Amortization of
       other intangibles   (3,331)      (3,202)      (9,946)      (8,129)

    Total operating
     expenses             (83,180)     (72,036)    (245,266)    (195,917)

    Operating income        43,304       35,782      151,100      117,772

    Interest income          6,502        6,166       21,458       18,678

    Income before income
     tax expense            49,806       41,948      172,558      136,450

    Income tax expense    (13,513)     (12,724)     (49,602)     (41,847)

    Net income             $36,293      $29,224     $122,956      $94,603

    Net income per share:
      Basic net income
       per share             $0.62        $0.51        $2.12        $1.66
      Diluted net income
       per share             $0.62        $0.50        $2.09        $1.63



                                  NDS Group plc
                           Consolidated Balance Sheets
    (in thousands, except share amounts)             As of           As of
                                                    March 31,      June 30,
                                                      2008           2007
                                                   (Unaudited)     (Audited)

    ASSETS
    Current assets:
      Cash and cash equivalents                     $696,247       $592,750
      Accounts receivable, net                       146,601        134,624
      Accrued income                                  49,111         40,605
      Inventories, net                                70,730         54,133
      Prepaid expenses                                23,466         19,415
      Other current assets                             4,325          3,926

    Total current assets                             990,480        845,453

    Property, plant & equipment, net                  49,471         54,801
    Goodwill                                         134,344        124,614
    Other intangibles, net                            58,947         63,080
    Other non-current assets                          81,844         56,905

    Total assets                                  $1,315,086     $1,144,853

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                               $30,486        $22,110
      Deferred income                                 84,400         75,777
      Accrued payroll costs                           37,677         31,186
      Accrued expenses                                34,693         37,473
      Income tax liabilities                          29,173         17,693
      Other current liabilities                       21,534         18,287

    Total current liabilities                        237,963        202,526

    Deferred income                                  123,773        157,517
    Other non-current liabilities                     63,550         46,537

    Total liabilities                                425,286        406,580

    Commitments and contingencies
    Shareholders' equity:
      Series A ordinary shares, par value $0.01
       per share: 16,170,513 and 15,718,904 shares
       outstanding as of March 31, 2008 and
       June 30, 2007, respectively                       161            157
      Series B ordinary shares, par value $0.01
       per share: 42,001,000 shares outstanding as
       of March 31, 2008 and June 30, 2007,
       respectively                                      420            420
      Deferred shares, par value 1 UK pound
       per share: 42,000,002 shares outstanding
       as of March 31, 2008 and June 30, 2007         64,103         64,103
      Additional paid-in capital                     585,221        563,388
      Retained earnings                              179,062         56,106
      Other comprehensive income                      60,833         54,099

    Total shareholders' equity                       889,800        738,273

    Total liabilities and shareholders' equity    $1,315,086     $1,144,853



                                  NDS Group plc
               Unaudited Consolidated Statements of Cash Flows
                                                   For the nine months ended
                                                           March 31,
    (in thousands)                                    2008           2007

    Operating activities:
    Net income                                      $122,956        $94,603

    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation                                    16,936         13,992
      Amortization of other intangibles                9,946          8,129
      Equity-based compensation                       13,695          6,256
      Other                                              557            546
      Change in operating assets and liabilities,
       net of acquisitions:
        Inventories                                 (16,597)       (12,692)
        Receivables and other assets                (48,111)       (58,970)
        Deferred income                             (25,121)         44,789
        Accounts payable and other liabilities        24,806            105

    Net cash provided by operating activities         99,067         96,758

    Investing activities:
    Capital expenditure                             (10,657)       (16,191)
    Short-term investments, net                           -        184,401
    Business acquisitions, net of cash acquired     (10,466)       (82,672)

    Net cash (used in) provided by
     investing activities                           (21,123)         85,538

    Financing activities:
    Issuance of shares                                 8,086         13,160

    Net increase in cash and cash equivalents         86,030        195,456

    Cash and cash equivalents, beginning of period   592,750        320,636
    Currency exchange movements                       17,467          5,420

    Cash and cash equivalents, end of period        $696,247       $521,512

SOURCE NDS Group plc

http://www.nds.com

"Cox is committed to giving our customers the best in simple, consistent and intuitive navigation," said Steve Necessary, Vice President of Video Strategy and Product Management. "NDS has extensive knowledge in the development of advanced applications and user interfaces for multiple platforms. We are looking forward to working with them to deliver world class services to our customers, on a platform capable of supporting tomorrow's new technologies."

"Building on our proven experience in the development of interactive applications, NDS is working closely with Cox to enable a high quality UI that will be delivered to market quickly," said Steve Tranter, Vice President of Broadband and Interactive for NDS. "As consumers grow more accustomed to a visually appealing, easy way to access their content, Cox has recognized that an interactive and customizable UI is essential to pleasing the customer, and we are delighted with the results of this collaboration."

In January 2008, Cox selected NDS to deliver IEX(TM), its automated STB testing solution. NDS' IEX combines hardware and software to automatically test all interactive applications on STBs operating in both cable and telecommunications environments, a task which was in the past handled manually and often was susceptible to human error. IEX provides a more accurate and cost-effective alternative to manual testing.

NDS provides a portfolio of market-leading solutions for digital television which includes VideoGuard(R), its proven conditional access solution for Pay TV, that is currently protecting over 86.9 million active devices worldwide. The NDS VideoGuard solutions portfolio includes VideoGuard Mobile(TM) for broadcasting to mobile devices, VideoGuard PC(TM) to secure content in personal computers, VideoGuard PMP(TM) for portable media players and RadioGuard(TM), for the HD Radio platform. NDS also offers an industry-leading suite of enabling software solutions including MediaHighway(R) middleware, interactive TV applications and digital video recorder (DVR) technology. NDS middleware has been deployed in 83.1 million devices and NDS DVR technology is powering over 12.1 million DVRs in viewers' homes around the world.

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About NDS

NDS Group plc (NASDAQ:NNDS), a majority owned subsidiary of News Corporation, supplies open end-to-end digital technology and services to digital pay-television platform operators and content providers. See www.nds.com for more information about NDS.

Read about the latest developments at NDS and in the Pay TV industry in World Vision

Click here for the NDS RSS feed

Cautionary Statement Concerning Forward-looking Statements

This document may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market, regulatory and other factors. More detailed information about these and other factors that could affect future results is contained in our filings with the US Securities and Exchange Commission. Any "forward-looking statements" included in this document are made only as of the date of this document and we do not have any obligation, nor do we undertake, to publicly update any "forward-looking statements" to reflect subsequent events or circumstances, except as required by law.

SOURCE: NDS

NDS
Cynthia Ritchie
Director, Corporate Communications
T: +44 (0)20 8476 8378
critchie@nds.com
or
Breakaway Communications for NDS
Kelly Fitzgerald, Managing Partner
T: +(1) 212 616 6006
kfitz@breakawaycom.com

Here are highlights from Wednesday's Analyst Blog:

Expect Sprint to Take Awhile

Sprint Nextel (NYSE: S) is a leading provider of business and wireless communications services in the U.S. The company is experiencing lower revenue and customer retention issues that have impacted overall financial conditions.

A new management team at the company has suggested that operating improvements may take several quarters to transcend to financial results. The company is challenged with subscriber growth issues and churning of postpaid subscribers to its rivals -- AT&T Wireless (NYSE: T) and Verizon Wireless (NYSE: VZ) -- primarily due to complications with its network integration of CDMA and iDEN wireless technologies.

Further expenditures on its WiMAX wireless infrastructure, while a possible differentiator for Sprint in the future, is expected to restrict earnings performance over the near-term and, therefore, we maintain our Hold rating.

Strength Continues at NDS Group

NDS Group (Nasdaq: NNDS) reported a solid fiscal third quarter of 2008 despite a currency headwind, and beat our revenue estimate handily while slightly exceeding our earnings estimate. Continued strength in conditional access, gaming and DVR technologies, as well as new deals in emerging markets helped drive revenues and growth.

We have maintained our revenue and earnings estimates for 2008 and 2009 and expect the company to continue to expand in emerging markets while adding additional revenue streams in developed markets. We continue to rate shares of NDS a Buy with a target price of $63.00 based on NDS selling between 23.0x 23.2x our new 2008 EPADS estimate of $2.72.

CEMIG Valuation Still Attractive

We are keeping our Buy recommendation on Companhia Energetica de Minas Gerais, or CEMIG (NYSE: CIG). The company posted slightly better-than-expected results for the first quarter of 2008, and the short-to-medium term outlook remains promising as demand for electricity in Brazil keeps growing.

We still have a positive outlook for the Brazilian economic environment in the short term, despite a less benign monetary policy. We believe the tariff reduction is already incorporated into prices, and the current valuation is highly attractive. Finally, CEMIG has a solid dividend payout and an attractive valuation.

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SOURCE: Zacks.com

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