- ThinkEquity is out positive on On2 Tech (AMEX:ONT) saying that with its Hantro Oy acquisition almost complete, and a bolstered balance sheet, they believe On2 is now better positioned to capitalize on the IP-video revolution, especially as consumers begin accessing video via consumer electronic (CE) devices, especially mobile. Firm believes Hantro not only extends the addressable market for VP6/VP7 to CE devices, it also positions On2 as the only multi-format codec provider that supports video compression at the embedded level (chipset). This, they believe, raises product barriers to entry forOn2's competitors, expands its core addressable market, and should, over the long term, dramatically improve the level of royalty-related revenues.

Adobe's recent announcement for support of H.264 (standard based codec used in the broadcast industry) could lead many investors to wonder if Adobe is in fact moving away from On2. ThinkEquity does not believe this to be the case. Regardless of which direction Flash moves, with Hantro, On2 now will benefit whether a content creator chooses H.264 or VP6, given that the combined company now has the ability to embed both pieces of software on a single chipset, an advantage that the firm believes will bear long-term fruit for the company. Reits Buy and $2.10 tgt on ONT.

Notablecalls: Think's Darren Aftahi looks to have lots of conviction regarding this little player. I would not be surprised to see ONT move somewhat higher following this call as the stock has been crushed over the past 6 months.