Digital River Extends Distribution Deal With Microsoft

News of the extension sent the e-commerce giant's stock up 5.3 percent Wednesday to close at $15.71.

Minnetonka-based Digital River, Inc., has extended its distribution agreement with its largest customer, Redmond, Washington-based Microsoft Corporation, by four months to March 2014.

News of the extension, outlined in a Wednesday filing with the U.S. Securities and Exchange Commission (SEC), sent the e-commerce giant's stock up 5.3 percent that day to close at $15.71. Shares were trading down 0.7 percent at $15.60 mid-day Thursday.

As part of the agreement, Digital River may build, host, and manage the Microsoft store-an e-commerce platform that supports the sale of both Microsoft and third-party software, as well as consumer electronic products, to customers throughout the world.

Digital River also may provide e-commerce services in connection with the Microsoft store on a global basis, according to the SEC filing.

Microsoft accounted for 28 percent of Digital River's sales last year-up from 25 percent in 2010 and 12 percent in 2009.

Since March 2011, Digital River has been providing cloud-commerce hosting and payment-processing services in connection with the Microsoft store, according to Digital River's annual report released in February. It also serves as a reseller for Microsoft products through Digital River's online stores.

Other services that Digital River provides to Microsoft include transaction and payment processing, e-marketing, digital downloads, and fraud prevention for some of Microsoft's software titles, including Microsoft Office, the annual report said.

In other Digital River news, Soros Management Fund, controlled by billionaire investor George Soros, has raised its stake in Digital River from 7.9 percent, or 3 million shares, to 10.1 percent, or almost 4.2 million shares.

Soros said in an SEC filing that it does not seek to change or take control of Digital River, which has taken a hit in recent months. The company reported last week that its first-quarter earnings fell 33 percent to $4.7 million on revenue of $102.4 million.

In Digital River's Wednesday SEC filing, it reaffirmed its financial guidance for the year. It expects revenue of between $402 million and $409 million and earnings per share in the range of 54 cents to 64 cents.

Digital River is among Minnesota's 50-largest public companies based on revenue, which totaled $398.1 million.