In a recent filing with the Securities and Exchange Commission (SEC), Digital River Inc. (DRIV) stated that it has extended its e-commerce deal with Microsoft Corporation (MSFT) through October 31, 2013. The agreement was originally scheduled to end in June 2012.
As per the new agreement, Digital River will build, host and manage an e-commerce store for Microsoft that will support the sale and fulfillment of Microsoft and third party software as well as consumer electronics products to customers in the United States. In addition, Digital River might also maintain its role as a reseller of Microsoft products via Digital River’s existing online stores.
As of now, Digital River is providing e-commerce services, ranging from transaction and payment processing, to e-marketing, digital downloads fraud prevention and multi-lingual customer support in support of some of the popular Microsoft software titles.
Microsoft accounted for approximately 11.8% of total revenues for Digital River in 2009, up from 7.1% in 2008. Digital River is on the look-out for new business in order to replace the loss of its prime customer – Symantec Corporation.
Symantec did not renew its e-commerce agreement with Digital River which ended on June 30, 2010. The loss will adversely impact the top line of Digital River as Symantec accounted for 21.5% of total revenues in 2009.
While Symantec has migrated portions of business from Digital River to its new e-commerce platform in certain geographic regions, it has not yet informed Digital River about the remainder of the migration program.
The stock price of Digital River got a huge blow crashing to a 52-week low of $21.83 when Symantec announced that it would not renew its agreement in October 2009. However, the stock got a boost from the news of extension of the Microsoft deal, closing at $30.02, up 8.9% from the previous day.