& cplSiteName &

SeaChange Battles Against the Tide

Alan Breznick
2/28/2014
50%
50%

Although it's now entering the third year of its three-year transition plan, SeaChange is far from high and dry just yet.

In fact, SeaChange International Inc. (Nasdaq: SEAC) is looking to come up for air and catch its breath as it continues to swim through turbulent waters. A little over two years after launching its shift from a mostly hardware-based approach to a software-centric one, the video-on-demand (VoD) technology specialist is still struggling to build a strong, sustainable business with an array of new software products and services (See More Changes Afoot at SeaChange.)

As the company made clear on a hastily scheduled preliminary fourth-quarter earnings call with analysts earlier this week, that struggle can be very frustrating. SeaChange reported that it will fall markedly short of its earlier revenue and earnings projections for the quarter that ended January 31. The vendor also warned analysts that it expects revenue to come in flat or down for the first half of the new fiscal year as well as for the entire year.

Specifically, SeaChange said it now expects that its fourth-quarter revenue will range between $34.5 million and $35.5 million, well short of its previous guidance of $40 million to $45 million. Likewise, the company said its non-GAAP operating income for the quarter will amount to a mere 1 cent to 2 cents per fully diluted share, way down from the 15 cents to 20 cents that it projected before.

Noting that he and his management team "were very disappointed" by the unexpectedly poor results, SeaChange CEO Raghu Rao blamed the shortfall on "delays in receiving anticipated orders from customers in the Americas, along with continued delays in receiving some final acceptances." He also noted that "the magnitude of these delays was greater than expected, given our customer concentration and the timing of our sales, wherein many sales occur toward the end of a quarter."

Rao sought to put some kind of upbeat spin on the news, which sent SeaChange's shares into a tailspin in after-hours trading late Tuesday before they began recovering a bit later in the week. He said company officials expect to receive all the missed customer acceptances in the first half of the new fiscal year. Further, he said company officials expect to receive "a majority of the [missed] orders" this year.

But Rau conceded that fiscal 2015 will be another challenging "transitional" year for SeaChange, whose future as an independent company has been the subject of industry speculation for months. He said company officials "anticipate that we will experience increased lead times in customer orders and acceptances and significant declines in sales of our legacy products" over the next 12 months, damping down revenues for the year.

With revenues from its legacy products declining at the rate of about 10% a year, SeaChange is pinning its hopes on such newer multiscreen video and user experience software products as Adrenalin, Nucleus, and Nitro. With such newer products already accounting for over two-thirds of the company's revenues in the fourth quarter, SeaChange is aggressively promoting them to both its cable and telco video customers. (See SeaChange Aids Com Hem's TiVo Rollout.)

"Despite the short-term challenges, we remain encouraged by the continued market traction for our new products… and the new opportunities in front of us," Rau said. With Comcast Corp. (Nasdaq: CMCSA, CMCSK) historically one of SeaChange's biggest customers, if not the biggest, he's also hopeful that Comcast's proposed buyout of Time Warner Cable Inc. (NYSE: TWC) will produce more business for his company.

In the meantime, though, SeaChange executives aim to wring more cost savings out of the business to boost profits in the coming year. They did not spell out how they would implement the cost reductions, whether through layoffs and/or other means.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(6)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
3/1/2014 | 3:15:17 PM
Re: Kind of Skimpy...
@albreznick, changing the course in such a turblent industry should not be surprised. I have to say I am very bullish on the VoD market, and the fact that SeaChange has been able to survive I think is a testament to that.

Traditional operators are going to be a great source of revenue for this company, and new delivery networks may also be as well.

Content on demand will not disappearing. 
Joe Stanganelli
50%
50%
Joe Stanganelli,
User Rank: Light Sabre
2/28/2014 | 11:37:53 PM
Re: "Transitional" year...
Well, Rome wasn't built in a day, and SeaChange's market certainly is a bit crowded...

That said, not everyone is bearish on the company, even in the wake of the earnings report.
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/28/2014 | 4:40:52 PM
Re: "Transitional" year...
That's true, Dan. It does seem like SeaChange has been in transition for at least the last four or five years. But they do keep bouncing back somehow. So I wouldn't count them out. I just wonder when the transition will actually end.     
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/28/2014 | 4:38:14 PM
Re: Kind of Skimpy...
So would I and a bunch of ther people, Tara. Yes, they were skimpy on the details. I think they do have a well-thought-out strategy for surviving. i'm just not sure how well they'll be able to execute it. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/28/2014 | 4:25:44 PM
"Transitional" year...
Haven't the last four or five years been transitional years? Asset sales, acquisitions, executive changes. At one point, they were going to sell the company, then reversed course--they have been all over the map.
TaraSeals
50%
50%
TaraSeals,
User Rank: Light Sabre
2/28/2014 | 1:42:02 PM
Kind of Skimpy...
...on the details, was SeaChange. I'd love to know more specifically what kind of growth markets they're aiming at. 
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Amazon Prime's Hand of God Creator on Producing for OTT

3|28|17   |     |   (0) comments


Ben Watkins is the creator, writer and producer of Hand of God, a series on Amazon Prime. At Light Reading's Cable Next-Gen conference in Denver, he explained the advantages of producing for an OTT platform versus traditional TV.
LRTV Custom TV
How Metrological Keeps Cable Customers on the Couch

3|28|17   |     |   (0) comments


Metrological offers an open source solution that reduces the time it takes cable operators to integrate OTT content into the linear television viewing experience.
LRTV Documentaries
The ABC of OTT

3|28|17   |     |   (0) comments


At Light Reading's Cable Next-Gen conference in Denver, Ben Watkins, creator of Amazon Prime's Hand of God show, explained how producing content for an OTT platform differs from producing content for traditional TV.
Shades of Ray
Why Analytics Is the Tech World's Digital Glue

3|27|17   |   02:20   |   (0) comments


It was obvious at the massive annual CeBIT enterprise tech trade show that the foundation for tech innovation right now is real-time analytics.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
LRTV Huawei Video Resource Center
AMS-IX & Huawei's OSN 902

3|24|17   |     |   (0) comments


Huawei shows how its OSN 902 platform helps the Amsterdam Internet exchange to connect the world using multiplexing.
LRTV Huawei Video Resource Center
Huawei's Smart Energy Innovation Center

3|24|17   |     |   (0) comments


In Nuremberg, Huawei showcases its latest capabilities in the digitalization of Internet resources, network infrastructure and intelligence at its Smart Energy Innovation Center.
Valley Wonk
OFC & Hyperscale: A Good Mix?

3|24|17   |   01:50   |   (0) comments


Cloud and telecom players want different types of equipment for their networks, as the chatter at OFC reveals.
LRTV Custom TV
Etisalat on NFV Journey

3|24|17   |   10:37   |   (0) comments


Etisalat is a service provider that prides itself on bringing innovative technologies to the markets it serves. It was one of the first operators to implement 3G and leads the pack in fiber penetration. Now, Esmaeel Al Hammadi, Etisalat's SVP of Network Development, explains the operator's journey to virtualization, beginning with the network core, as well as the ...
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
Welcome to the Wild West of Privacy
Carol Wilson, Editor-at-large, 3/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Working From Home Doesn't Work for Everyone Click Here
You shouldn't nap on your keyboard, for instance.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.