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Cable/Video

BigBand's Material World

2:20 PM -- BigBand Networks Inc. (Nasdaq: BBND)'s been struggling to find revenue growth amid a drying up of new switched digital video (SDV) deployments, but it appeared as though its recent deal to supply its MSP2000 to AT&T Inc. (NYSE: T) to help with local ad insertion showed some promise. And that's pretty much how investors reacted to the news. (See AT&T Deal Boosts BigBand.)

BigBand didn't disclose the terms of the deal, but did say that AT&T was poised to become a "material" customer in the second half of the year. Morgan Keegan & Company Inc. 's Simon Leopold did one better in a note issued today suggesting that he believes the deal is worth $4 million to $9 million (including services) over several quarters – not exactly a king's ransom.

But taken into context, it's still not too bad for a company that's struggling to diversify its primary purchasing sources.

Leopold recalls that that BigBand brought in just over $18 million in the first quarter of 2011, so it wouldn't take much for AT&T to become one of BigBand's 10 percent-or-greater customers.

BigBand will be taken to task on its growth prospects soon enough; it reports second quarter numbers later today.

In the meantime, Leopold's rekindled the idea that BigBand, with an enterprise value of just $18 million, could become an attractive takeover target. Having AT&T in the stable as a new customer doesn't hurt.

And that idea might not be all that far-fetched if a prospective buyer believes that the dense edge QAM market still has legs or the modular version of cable's next-gen Converged Cable Access Platform (CCAP) stands a chance of making hay – something CommScope Inc. apparently believed when it snapped up LiquidXstream Systems last month. (See Why CommScope Bought LiquidxStream.)

— Jeff Baumgartner, Site Editor, Light Reading Cable



Jeff Baumgartner 12/5/2012 | 4:58:06 PM
re: BigBand's Material World

BBND's current 10% or greater customers are: Bright House, Charter, TW Cable and Verizon.

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