BigBand Beats Street, Trims 5%
The cuts reduced BigBand's staff by about 20, and reflected the company's effort to become a "pure play" digital video company, BigBand chairman and CEO Amir Bassan-Eskenazi said yesterday afternoon during a call with reporters and analysts. As a result, BigBand will take a charge of about $400,000 for employee severance and a $800,000 charge "for facility related expenses."
Last fall, as part of a larger restructuring, BigBand laid off 15 percent of its workforce following the decision to scuttle its "Cuda" cable modem termination system (CMTS) and apply more focus on video gear and software, including its line of edge QAMs and its broader switched digital video (SDV) platform. (See BigBand Terminates CMTS.)
BigBand posted first quarter revenues of $39.9 million, up from $30.7 million in the prior period. The company's GAAP net loss was $1.9 million (3 cents per share), narrowed from a net loss of $13.8 million (23 cents per share) in the fourth quarter. Wall Street expected the company to pull in revenues of $37.5 million and a loss of 4 cents per share. BigBand shares were down 17 cents (2.31 %) to $7.18 each in early trading Friday.
BigBand reported some progress with SDV during the quarter. Bassan-Eskenazi said the company had SDV deployed or in the process of being deployed in cable systems passing more than 14 million homes, up from 12 million in the prior quarter. MSOs in that total include Cablevision Systems Corp. (NYSE: CVC), Time Warner Cable Inc. (NYSE: TWC), Charter Communications Inc. , Cox Communications Inc. , and, according to industry sources, possibly Vidéotron Telecom Ltd.
Comcast Corp. (Nasdaq: CMCSA, CMCSK) has approved BigBand as an SDV vendor, but BigBand's current deployment total does not include any with the nation's largest MSO, which has disclosed only small tech trials in Colorado and New Jersey, and, at least in the near-term, appears to be more interested in an "all-digital" strategy. (See Comcast Confirms Digital Dongle Project.)
Although there's nothing material to discuss yet, at least one analyst says BigBand stands to gain some SDV share from Comcast in the coming month. "We believe [BigBand] will likely win a piece of Comcast's switched broadcast…business, however small, for deployment starting near the end of this year," according to a note issued by ThinkPanmure LLC Friday morning. That business could include BigBand's SDV session management system, which, the firm estimates, accounts for about 20 percent of the entire cost of the SDV platform.
SDV win-backs, capacity expansions
Not counting any activity tied to Comcast, BigBand attributed a portion of its quarterly SDV growth to some cable market wins that originally were awarded to BigBand competitors. Bassan-Eskenazi did not say which of its rivals were affected, but Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT) are viewed as BigBand's primary SDV system competitors.
In addition to a wider switched digital footprint, BigBand also made gains thanks to a recent capacity expansion by Cablevision, which is using SDV to deliver more of its high-definition television lineup. (See Voom Tunes .) Bassan-Eskenazi was hopeful that the trend at Cablevision will be extended at other MSOs and provide incremental revenue streams for BigBand. However, he expects most near-term SDV growth to come from new footprint grabs rather than expansions of earlier deployments.
Looking ahead, BigBand expects second quarter revenues in the range of $40 million to $43 million, and a GAAP net loss per share of 7 cents to 10 cents per share.
— Jeff Baumgartner, Site Editor, Cable Digital News
Interested in learning more on this topic? Then come to The Future of Broadband 2008, a conference that will provide a definitive view of the trends that will shape broadband services through 2010 and beyond into the next decade. To be staged in New York City, May 13, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.