Integration is the hot topic of late in the macrocap space, and it’s only natural that some smallcap companies have followed suit. DigitalFX International Inc. (OTCBB: DFXN) and Fusion Telecommunications International Inc. (Amex: FSN) certainly feel this is the answer with their latest announcement to combine Fusion’s Digital Phone Service into DigitalFX’s Advanced 2.0 video, storage and convergence offerings.
The companies plan to integrate Fusion’s advanced unified messaging and digital telephone service into DigitalFX’s cutting edge Web 2.0 offerings for enterprises and individuals that include video creation and streaming, digital storage and advanced convergence technology. DigitalFX will offer Fusion’s advanced services, including digital phone service, as part of its flagship product called “The Studio.”
“The Studio” gives individuals, enterprises and social networks worldwide the ability to create, upload and manage all their digital assets online, including live webcasts, streaming videos, e-mail correspondence as well as video email, podcasts, music, pictures and more.
“The convergence of voice, video and on-line content management is the future of communications,” stated Matthew Rosen – president and CEO of Fusion – in a press release. “It’s a powerful combination, and gives consumers unparalleled control over their increasingly digital lives. Creating, recording, sharing – whether live or stored, via voice, video or text – has never been so accessible or so easy.”
As mentioned earlier, the macrocap space has seen some big consolidation with Canadian publisher Thompson Corp.’s bid to buy Reuters for $17.8 billion, creating the world’s leading provider of news and data for professional markets. With 34 percent of the financial information market, the new Thomson-Reuters will overtake privately-owned Bloomberg LP on 33 percent, according to industry newsletter Inside Market Data.
More big news involving a big player acquiring one of the “little guys” surfaced yesterday as iconic Web-based financial show Wallstrip.com was purchased by CBS as part of the media network’s move to expand and develop its Web presence. Wallstrip will continue as its own brand, according to CBS, while the talent behind the show will work on creating original Web and mobile content for the network. CBS executives said that given the rapidly changing media landscape on the Web, it’s necessary to for the network to go outside of its own talent base to find the best talent for the medium.
Macrocap companies can consolidate/buyout smaller companies with ease due to the robust cash flow, but smallcap companies need solid – although much smaller – financials in place to make the marketing and execution of its products and services work. In the latest quarter, DigitalFX reported a solid cash position with $5.7 million and had revenues of $6.4 million. Fusion, in its latest quarter, reported a respectable cash position with $1.7 million and even better revenues of $13.2 million.
“We’ve already seen the value of offering a digital phone service solution for our customers, who have begun to express interest in expanding their service options. We expect the orders to grow and with them, significant revenue opportunities for DigitalFX and Fusion,” stated Craig Ellins – CEO of DigitalFX – in a press release.
Integrating products and consolidating businesses is always a challenging road to travel. What does the future hold for DigitalFX and Fusion, and will they be able to overcome the obstacles of working together to reach the pot of gold at the end of the rainbow? Examining both companies reveal two certainties: DigitalFX and Fusion have the necessary financials to make a good run, plus they have the experienced and driven management teams needed to lead. Only time and revenues will tell. Best of luck!