‘Not Jazzed’ on BigBand
Following BigBand’s in-line fourth quarter, better-than-expected guidance for the first quarter of 2008, and decent “deferred revenue” growth, Jefferies & Co. Inc. analyst George Notter maintained his Hold rating on the stock. (See BigBand Plays Q4 Loss .)
Although visibility into BigBand’s business with Verizon Communications Inc. (NYSE: VZ) is improving, Notter said he is growing concerned about the competition mounting against BigBand on the SDV front.
But how concerned investors should be and how rapidly this competition is emerging remains difficult to gauge. That’s because BigBand’s main foils in this area -- Scientific Atlanta /Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT) -- continue to chirp about high and mighty SDV deployment “commitments” rather than commercial rollouts. Commitments, like rules, can be broken, particularly if it's later found that the committed party isn't performing up to expectations.
On Friday, Motorola, in an effort to play up its role at the press-free/target-rich CableLabs Winter Conference next week, reconfirmed SDV commitments for 24 million homes, plus compatibility work with edge QAMs from two third-party vendors: Arris Group Inc. (Nasdaq: ARRS) and Harmonic Inc. (Nasdaq: HLIT). Moto didn’t say as much, but we hear that a healthy chunk of those commitments is coming by way of Comcast Corp. (Nasdaq: CMCSA, CMCSK), which has yet to say much publicly about SDV beyond its initial trials in Cherry Hill, N.J., and Denver. (See Comcast Reveals SDV Test Beds and Comcast Puts SDV Vendors to the Test.)
Cisco has most recently said its commitments for SDV have exceeded 7 million homes passed. (See SA Touts SDV Milestone.)
For its part, BigBand has cited real SDV deployment activity with six MSOs spanning 20 systems and a combined 12 million-plus homes passed. More than 1 million homes are for the Moto set-top environment.
“The lack of comparable and well-defined metrics really has us scratching our heads,” Notter wrote. “However, BigBand clearly has far more extensive deployment experience than their competitors. Given the heavy interoperability requirements of SDV and the myriad differences in cable systems, that deployment experience is likely a meaningful differentiator.”
We’ve been wondering about that, too, particularly when it comes to Comcast’s purported commitment to use Imagine Communications ’s ICE Broadcast System to free up bandwidth, and how that plan might affect the timing of the MSO’s SDV strategy. (See Imagine Raises the Bandwidth Bar .)
Adding to the intrigue: BigBand is suing Imagine, alleging that the company is infringing on three patents tied to advanced video processing. (See BigBand Throws the Book at Imagine.)
Friedman Billings Ramsey & Co. Inc. analyst Brian Coyne suggested recently that Comcast’s SDV initiative could be on the backburner until the second half of this year, with more meaningful turn-ups coming in 2009. It’s still unclear whether that’s because of a strategic technology shift or if Comcast is still ironing out the technology before making any massive moves with SDV.
We’ve tried to get the official update from Comcast, but we are still awaiting word. However, our additional checks indicate that the MSO, following its SDV request for proposal (RFP), remains bullish on the technology. It may be that Comcast has decided to stagger its rollout, and that, in turn, has caused some sort of a perceived delay in the operator’s switching strategy.
It’s likely that we’ll soon get an update directly from the horse’s mouth. Comcast is scheduled to discuss its fourth-quarter earnings the morning of Valentine’s Day. Maybe then we’ll find out how broadly Comcast is spreading the love toward SDV.
— Jeff Baumgartner, Site Editor, Cable Digital News