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China Digital TV Files for IPO

NEW YORK (AP) – China Digital TV Holding Co., which provides conditional access systems to China's digital television market, filed an initial public offering of American Depositary shares with the Securities and Exchange Commission on Friday.

The company did not disclose the expected number of shares or price range to be offered, but indicated the offering price could total up to $150 million.

Chinese television network operators are in the early stages of switching from analog to digital transmissions, and are expected to complete the transition by 2015. China Digital TV develops software used in conditional access systems, which are a key component of pay-television platforms, and set-top boxes for digital TV subscribers. The company also sells smart cards that enable digital TV network operators to control access to their programs.

As of June 30, China Digital TV had installed its systems at 130 digital television network operators.

In the six months ended June 30, China Digital TV increased its profit to $12.2 million, from $3.4 million in the prior-year period. During the same period, the company grew its revenue to $21.7 million, from $10.4 million.

The company said sales of its smart cards accounted for 88 percent of total revenues in the six months ended June 30.

China Digital TV noted that it has identified “several significant deficiencies” in its internal control over financial reporting. The company expects to incur up to about $1 million in expenses to correct the deficiencies in 2007 and 2008.

The company plans to use the net proceeds from the IPO for research and development, sales and marketing, acquisitions and general corporate purposes.

China Digital TV noted the total offering price was estimated solely to calculate its registration fee and may change.

Morgan Stanley and Credit Suisse Securities are serving as the IPO's lead underwriters. Piper Jaffray, CIBC World Markets and Needham & Co. are also underwriting the offering.

China Digital TV plans to list its shares on the New York Stock Exchange under the symbol “STV.”