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Cable modem/CMTS

BigBand OKs 'Change of Control' Exec Packages

A recent Securities and Exchange Commission (SEC) filing by BigBand Networks Inc. (Nasdaq: BBND) could renew speculation that the digital video specialist is seeking a sale, but analysts are questioning whether there's much fire yet to go along with the smoke.

In an 8-K filing made on Thursday, BigBand disclosed that its compensation committee "approved the standardization of change of control severance benefits for each of the Company's executive officers."

Under the approved plan, each BigBand executive officer is entitled 12 months of his or her base salary, plus 12 months of health insurance benefits, if the exec is terminated without cause within six months of a "change in control of the Company."

Rumors swirled in late October that BigBand could be dressing itself up for a possible acquisition after deciding to "retire" its cable modem termination system (CMTS) product line, a loss leader that was draining company resources and having a tough time securing new deployments in a mature market dominated by Cisco Systems Inc. (Nasdaq: CSCO), Arris Group Inc. (Nasdaq: ARRS), and Motorola Inc. (NYSE: MOT). (See BigBand for Sale? and BigBand Terminates CMTS.)

At the time, BigBand CEO Amir Bassan-Eskenazi declined to comment on the rumor. On Friday, a company spokesman did the same.

Industry analysts, meanwhile, noted that such filings are fairly routine and that it's difficult to pinpoint any potential BigBand suitors in the near-term.

"Until I can identify a likely buyer, I hesitate to say that somebody's for sale," says Simon Leopold, a communications equipment analyst for Morgan Keegan & Company Inc.

He said BigBand's acquisition prospects could heat up perhaps as long as a year from now if companies that aren't heavily exposed to cable television verticals, such as Alcatel-Lucent (NYSE: ALU), find interest in BigBand. But AlcaLu, he notes, has plenty of other stuff on its plate to tend to these days. (See AlcaLu Tops 2007 Turkeys List.)

"I don't think [the filing] means they are definitely for sale," Heavy Reading Senior Analyst Alan Breznick said of BigBand's future prospects. "But it's one of those things that you would check off the list to get it done."

At the same time, such protection could dissuade potential buyers. Though not a poison pill, approval of generous severance packages for top execs ensure it would cost a suitor more cash to get a deal for BigBand completed.

In late October, Arris chairman and CEO Bob Stanzione said his company was open to pursuing more acquisitions, particularly if they filled any remaining gaps in Arris's digital video portfolio. However, it's unlikely that Arris will be in a position to make any big buys for quite awhile as it integrates C-COR Corp. (Nasdaq: CCBL). That deal, valued originally at $730 million, is expected to close by late Friday (December 14) afternoon. (See Arris Takes 'Giant Leap Forward', What's Next for Arris? and C-COR-Arris Deal Approved.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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