Thomas Nielsen

Newly minted RealNetworks CEO Thomas Nielsen has pragmatic outlook, a sharp sense of humor and a ton of energy, as evidenced by the fact that he sealed one of the most significant transactions in the company’s recent history — this morning’s $120 million patent and software sale to Intel — after less than three months on the job.

Investors like his approach so far. Shares of the company are up as much as 30 percent on the news of the deal and partnership with the chip giant.

In an interview with GeekWire, Nielsen said the Intel deal will be just the first in a series of acquisitions, divestitures and other deals designed to bring new clarity to the company’s business — aiming to return RealNetworks to the type of growth it experienced in its heyday as an Internet pioneer.

Everything is on the table, he said, except for a sale of the company itself.

“RealNetworks has so many businesses that, if I were to give you the elevator pitch of what we do, it’d better be a very tall building,” he said.

Continue reading for excerpts from his comments.

On the significance of the Intel deal: This is an amazing deal for us, on many levels. When I came in in early November and took a first look at the company, one of the things I looked at was, how can we unlock some of the value that is in RealNetworks that has frankly not been realized over the past few years. We sit on an incredible amount of innovation in the form of patents that have been filed and issued or in the filing process over the last 10 years. As you know, RealNetworks over the last 10 years has developed a lot of encoding, decoding and streaming technologies. One of the things I quickly latched on to was what we call the next-generation video codec. (The Intel deal) is a way that we can monetize those two assets in a way that really will bring not only shareholder value, but will give me an opportunity to go invest in new businesses.

How the deal works: Intel was the natural choice for us to not only help us bring the next-generation codec to a wide consumer audience, but also to help us monetize that patent portfolio that we’d been sitting on, in a way that frankly is an amazing deal for RealNetworks, because we get a license back from Intel to basically utilize our own patents in current and future products. You’re basically selling the building that you occupy and then you’re leasing it back. That’s how the patent deal works. Frankly this is one of the biggest deals that RealNetworks has done in the last four to five years.

What the company will do with the money: This clearly gives me an opportunity, together with a very strong balance sheet, to go make investments in new products and markets over the next 18 to 24 months, as we build out the next version of RealNetworks.

Any hints about what those investments might be? We are clearly looking at large markets where RealNetworks can capture a significant share of that market and latch on to that. It’s probably about 90 to 120 days too early to where I can give you details. If I started hinting at it, you’re a smart guy, you’d be able to figure that out, and the people who keep me out of the orange jumpsuit would not like that. … But seriously, it’s a wonderful question, the money will be spent for future growth for RealNetworks. My mission is to get RealNetworks on a growth path that looks like a true growth company like it was seven to 10 years ago. Whether we realize that through some of the existing businesses, doubling down on that, or whether we look for adjacent or new markets, that’s a little too early to say.

Are there other divestitures or asset sales that you could make along these lines? The broad answer is yes. When I came in and spent my first eight to 10 weeks, we did a complete bottoms-up review of every single business line in RealNetworks, technology assets that we have around, and asked, what is the value here, and is this something we can realize on our own, and if so, what do we think that looks like? Or would it be better to partner, sell, etc.? We are in the middle of completing that process right now, so I would not be surprised if you see other transactions in the next 180 days — both inbound and outbound, by the way.

What about the games division? Is that one of the assets on the table? That has been discussed in the past. I would actually be broader. Everything is on the table right now. We are evaluating every single one of our businesses to decide which ones are strategic to RealNetworks and which ones can we truly win in. Games is one of these funny things. We actually have made substantial investments in the last 18 months in our social and mobile side, and started to see some really incredible wins. The latest game, Bayou Blast, is starting to get a (daily average user count) that’s creeping up there among the top three or four in the space. We’re monitoring this almost on a day-to-day basis to see, is this an opportunity for us to really go big in these games? And I think there’s a pony in there.

When you’re talking about everything being on the table, does that include a sale of RealNetworks itself? I would say that is probably off the table at this point in time. The board and myself obviously are looking at various options here. It’s not in my task to sell the company. I think we can go the distance on our own, in terms of forming partnerships like we did with Intel, which I am much more attracted to than trying to offload the company.

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  • TN

    RealNetworks CEO Thomas Nielsen: “Wow, RealNetworks? Are they really still around?”

    It’s the first question Thomas Nielsen asked when he was tapped to become president and CEO of the Seattle-based company in November. “My initial reaction was: wow, RealNetworks? Are they really still around?” the Danish-born 41-year-old recalls.

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