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Cable modem/CMTS

BigBand Beats the Street

BigBand Networks Inc. (Nasdaq: BBND) bolted off the blocks fast in its first report as a publicly traded company, beating revenues and earnings estimates.

Late Thursday, BigBand posted revenues of $52.8 million and net income of $5.8 million, or 9 cents per diluted share. That compares to year-ago revenues of $32.6 million and a loss of $1.1 million, or 9 cents per share.

Wall Street was expecting BigBand to finish the first quarter with $49.8 million in revenues and net income of 3 cents per share.

BigBand, which makes a range of digital video and cable modem termination system (CMTS) gear and software, expects to pull in full-year revenues in the range of $225 million to $230 million and earnings per share of 6 cents to 11 cents. For the second quarter, the company anticipates revenues of $52 million to $56 million and earnings of 2 cents to 6 cents per share.

Jefferies & Co. Inc. reiterated its Buy rating on the stock and a price target of $22.

Although BigBand's quarterly and annual sales forecasts were in line with consensus views, "this outlook likely pressures the stock," wrote Morgan Keegan & Company Inc. analyst Simon Leopold, in a recent research note.

And, indeed, the pressure was on. In midday trading Friday, BigBand's shares were down $2.73 (12.74%) to $18.70.

Despite the dip, analysts were upbeat about BigBand's prospects, particularly in the area of switched digital video (SDV), a developing platform that allows operators to conserve precious bandwidth by delivering "switched" networks to homes only when customers in a particular user group select them.

Analysts believe BigBand has been able to extend its influence in that market beyond its initial work with Cablevision Systems Corp. (NYSE: CVC) and Time Warner Cable Inc. (NYSE: TWC). (See Mulling a Milestone.)

"We believe BigBand has secured Cox as its most recent switched digital broadcast account, and it will likely be deployed there in multiple cities over the summer," according to a note from ThinkEquity LLC , which maintained its Accumulate rating on the stock and a price target of $19.

The firm also writes that Cisco Systems Inc. (Nasdaq: CSCO) is on board as Cox's second SDV vendor.

Competition is ramping up in SDV sector, coming from several large suppliers, including Motorola Inc. (NYSE: MOT), Cisco/Scientific Atlanta , C-COR Corp. (Nasdaq: CCBL), and Tandberg Television , which bowed in its platform just this week. (See Tandberg Intros SDV.)

ThinkEquity also views Comcast Corp. (Nasdaq: CMCSA, CMCSK) as "a significant revenue swing factor in 2008," and believes the MSO is presently looking at systems from Motorola and C-COR. The MSO should add BigBand and Cisco to the evaluation mix this summer. Comcast has already identified two SDV test markets -- Denver and New Jersey. (See Comcast Reveals SDV Test Beds.)

"We believe BigBand is a contender, with 50 percent probability of gaining some of this [Comcast] business," forecasts the firm.

— Jeff Baumgartner, Site Editor, Cable Digital News

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