Light Reading

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
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. 
Flash Poll
From The Founder
Networks of the future will rely on "white box" switches and servers rather than proprietary hardware and that's going to alter the shape of the communications industry. Who says so? John Chambers.
LRTV Custom TV
The Benefits of HyperScale Clouds for NFV

3|27|15   |   01:50   |   (0) comments


Hyperscale cloud has been developed by the Internet giants to support the creation and delivery of software-based services at blistering speeds, and at the lowest possible cost. The original ETSI NFV vision was to adopt hyperscale cloud architecture and practices. This vision has become somewhat obscured along the way, due to misunderstandings about the hyperscale ...
LRTV Huawei Video Resource Center
eLTE Rapid Meets the Need for Speed

3|26|15   |   4:45   |   (0) comments


Designed especially for emergency and dedicated ad hoc local mobile communications coverage, Huawei's eLTE Rapid solution can deliver trunked voice, video and data coverage for multiple users over a 6km range and be set up in just 15 minutes, explains Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
On Videos: Challenges & Opportunities

3|26|15   |   5:56   |   (0) comments


Most everything is now connected. And along with 4K and 4G technologies, everyone could be creating and broadcasting video contents. Users are expecting better video experience with any screen, anywhere and anytime. Operators will meet new challenges, but also see some big opportunities.
LRTV Custom TV
JDSU: Delivering Dynamic Networks for a Personalized Experience

3|26|15   |   5:59   |   (0) comments


Light Reading speaks to JDSU at Mobile World Congress 2015 about new solutions in the areas of HetNets, VoLTE, backhaul, virtualization, big data analytics, and real-time intelligence.
LRTV Custom TV
Smarter Service Chaining & New Ways to Benefit From Qosmos Technology

3|25|15   |   03:11   |   (0) comments


David Le Goff, director of strategic and product marketing at Qosmos, explains how the company has added application awareness to subscriber information to make service chaining more efficient and reduce costs for networking and infrastructure. In addition, Qosmos technology, which has been delivered as C libraries, is now also available as a virtual machine, ...
Between the CEOs
Qosmos CEO: The Changing Face of DPI

3|24|15   |   13:53   |   (0) comments


LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures. Also, how the comms market is becoming more like the automotive industry.
LRTV Huawei Video Resource Center
FC Schalke Scores With Its Agile Stadium

3|24|15   |   6:23   |   (0) comments


Top German soccer club FC Schalke 04 has deployed a new, agile WiFi network from Huawei in its Veltins-Arena stadium and is reaping the benefits in terms of customer satisfaction and business opportunities, explains marketing chief Alexander Jobst.
LRTV Huawei Video Resource Center
Huawei’s Insights on Mobile Video

3|24|15   |   7:51   |   (0) comments


More people than ever are now watching videos on smartphones. Seventy percent of mobile traffic will be video traffic until 2018. In this video, Huawei's exports give their insights on mobile video in terms of business model, network planning and 4G network construction.
LRTV Documentaries
The Rise of Industry 4.0

3|24|15   |   02:26   |   (9) comments


Are you ready for the fourth industrial revolution? It's a big deal for influential operators such as Deutsche Telekom.
LRTV Huawei Video Resource Center
Getting Connected With eLTE

3|23|15   |   06:04   |   (0) comments


Trunked radio communications have entered the 4G LTE world, and with Huawei's eLTE solution, can now deliver a full range of data and video services as well as push-to-talk voice, explains Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
Funkwerk’s on Track With Huawei

3|19|15   |   3:23   |   (0) comments


GSM-R technology specialist Funkwerk and Huawei have forged a partnership that is benefiting both parties, notes Funkwerk's Gottfried Winter.
LRTV Documentaries
How EANTC Tested Cisco's Virtualization Solutions

3|18|15   |   5:49   |   (0) comments


Carsten Rossenhövel, managing director of independent test lab EANTC, tells Light Reading founder and CEO Steve Saunders about the innovative approach his team had to take when validating Cisco's service provider virtualization and cloud solutions.
Upcoming Live Events
April 14, 2015, The Westin Times Square, New York City, NY
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
All Upcoming Live Events
Infographics
Hot Topics
AT&T Woos SMBs With Small-Scale WiFi
Sarah Thomas, Editorial Operations Director, 3/26/2015
The Rise of Industry 4.0
Ray Le Maistre, Editor-in-chief, 3/24/2015
Google Hires Wall Street's Most Influential Woman as CFO
Dan Jones, Mobile Editor, 3/24/2015
Average US Broadband Speeds No Great Shakes
Mari Silbey, Independent Technology Editor, 3/25/2015
Net Neutrality Suits: Only The Beginning?
Alan Breznick, Cable/Video Practice Leader, 3/24/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Chattanooga’s EPB publicly owned utility comms company has become a poster child for how to enable a local economy using next-gen networking technology. Steve Saunders, Founder of Light Reading, sits down with Harold DePriest, president and CEO of EPB, to learn how EPB is bringing big time tech to small town America.
Cats with Phones
Interspecies Phone Love Click Here
"No, you hang up."
"No, YOU hang up."
Latest Comment