Vizio Files for IPO
TV Set producer Vizio (pvt) has filed with the SEC for listing for the 2nd time, with the first filing, made on July 24, 2015 and withdrawn those plans in 2016 after reaching a deal to sell the company for $2b to Leshi Internet Information & Technology Corp, which luckily did not actually occur. Leshi, aka Le.com (formerly 300104.CH), once known as “China’s Netflix”, was a video streaming service run by founder Jia Yueting, a former tech support officer who purchased a number of companies, including low-end Smartphone producer Coolpad (2369.HK) in 2015, Le Vision Pictures (pvt), a large Chinese film producer and distributor, a video-as-a-service company, started Faraday Future (potential symbol FFIE - SPAC), an electric vehicle development company, and had a very short relationship with China’s Truly (7321.HK) Display that ended in a lawsuit. Due to issues of leverage and default in China on $72m he owed to Ping An Group (000100.CH), his assets in China were frozen along with holdings in the US and the BVI, with a final bankruptcy filing in 2019 with over $2b owed to various entities.
So Vizio actually dodged a big bullet by not joining forces with LeEco and has been developing its TV set business, starting by the unusual step of finding a home in big-box retailer stores, when they found that the more typical TV retail outlets did not want another brand competing against key brands like Samsung (005930.KS) and Sony (SNE). Vizio was able to establish its brand with giant stacks of TV sets that were usually right near the entrance to such stores and always seemed to be on sale. Vizio has been able to produce TV sets that are less expensive than name brands but have almost or the same feature set without any major technical problems, and has established a strong share in North America, which has been as high as #2 for much of the last two years on a unit basis.
Built into Vizio TVs is their Smartcast OS, which is the support vehicle for streaming services and the company’s somewhat controversial ACR system which identifies user content and helps advertisers target relevant ads. All in Vizio runs a mostly outsourced model with Vizio’s TV set and sound bar production done on an ODM basis, with a mostly ‘hands off’ approach from the company after design input. The company has a concentrated sales platform in that its four largest retailers made up 85% of device revenue last year, with Best Buy (BBY), Costco (COST), Sam’s Club (pvt), and Walmart (WMT) all contributing greater than 10% each, none of whom have long-term contracts.
Suppliers:
So Vizio actually dodged a big bullet by not joining forces with LeEco and has been developing its TV set business, starting by the unusual step of finding a home in big-box retailer stores, when they found that the more typical TV retail outlets did not want another brand competing against key brands like Samsung (005930.KS) and Sony (SNE). Vizio was able to establish its brand with giant stacks of TV sets that were usually right near the entrance to such stores and always seemed to be on sale. Vizio has been able to produce TV sets that are less expensive than name brands but have almost or the same feature set without any major technical problems, and has established a strong share in North America, which has been as high as #2 for much of the last two years on a unit basis.
Built into Vizio TVs is their Smartcast OS, which is the support vehicle for streaming services and the company’s somewhat controversial ACR system which identifies user content and helps advertisers target relevant ads. All in Vizio runs a mostly outsourced model with Vizio’s TV set and sound bar production done on an ODM basis, with a mostly ‘hands off’ approach from the company after design input. The company has a concentrated sales platform in that its four largest retailers made up 85% of device revenue last year, with Best Buy (BBY), Costco (COST), Sam’s Club (pvt), and Walmart (WMT) all contributing greater than 10% each, none of whom have long-term contracts.
Suppliers:
Customers:
Current holders of the company’s private shares are as follows (pre-deal):
Vizio will be the only US based public company producing TV sets under its own brand, with others, such as Westinghouse and RCA licensed to other manufacturers. While this is an ideal time for a TV set company to come public, given the COVID-19 pandemic’s stay-at-home lifestyle change, the company carries the same cyclical risks and burdens of other TV brands. Profitable for the last two years and on and off profitability in previous years, will likely continue to be the case for Vizio, but we note that the company has moved far up the scale in terms of credibility as a legitimate TV brand over the last few years, particularly in North America. We have no stake in the company but we do have a Vizio 55” TV, which is the 2nd Vizio TV we have owned personally over the last few years. Our experience has been positive.
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