x
Cable/Video

MSO Order Delays Hit Vecima

Vecima Networks Inc. (Toronto: VCM) revenues fell 34 percent in its fiscal third quarter as cable MSOs tightened their belts and delayed product orders. (See Vecima Posts Q3.)

Despite the big drop in revenues, Canada-based Vecima, a vendor that makes cable edge QAMs, digital-to-analog video gear, and WiMax equipment, still managed to pull in a small profit, thanks in part to some significant capital spending reductions and a cap on new hires.

Table 1: Earnings Snapshot
3Q08 3Q09 Change (%)
Revenues (US$M) 30.4 20.1 -34%
Net Income (US$M) 3.2 1.2 -63%
EPS (US$) 0.14 0.06 -57%
Source: Vecima Networks




"It has been a challenging quarter to say the least," Vecima chairman and CEO Dr. Surinder Kumar said on this morning's call. Vecima began "to see signs of softness as customers delay purchases until market conditions improve."

Kumar also provided more color on a recent warning that the revenue shortfall in the third quarter and a delay in a new cable network product will cause full-year revenues to be flat or down 5 percent. Originally, Vecima had targeted revenue growth in the range of 20 percent to 30 percent. (See Vecima Issues Revenue Warning.)

The product in question is the Terrace A, a multi-unit digital transport adapter (M-DTA) that is powered by a chipset supplied by BroadLogic Network Technologies Inc. , a startup that counts Comcast Interactive Capital , Time Warner Investments , and Advance/Newhouse among its investors. That device, designed for apartments and other multiple dwelling units, converts incoming digital video signals to analog, allowing older TVs to display the signal without the need for a discrete digital set-top box. (See BroadLogic Collects More Cable Cred and Vecima Box Lets MDU Residents Keep Old TVs.)

Last year, Vecima said it won a multiyear supply and maintenance deal for the Terrace A with a "leading" U.S.-based cable MSO. The vendor hasn't revealed the customer, but Comcast Corp. (Nasdaq: CMCSA, CMCSK), which is moving ahead rapidly with an analog reclamation project using individual DTA devices, is considered to be one of the lead candidates. (See Comcast's $1B Bandwidth Plan .)

Kumar said Vecima is polishing off the last "1 to 2 percent" of that product and working out some software bugs to ensure that the product is up to the customer's specifications. He shot down the notion that the product requires a silicon re-spin, indicating that shipments started in "small volumes" during the fiscal fourth quarter, and is confident that the ramp will rise in the following financial period.

Vecima is also working on a follow-up product called the TerraceQAM, a device that's capable of delivering encrypted digital hi-def and standard-def video directly to newer flat-panel digital TV sets, again without the need for separate set-top boxes. (See Vecima Wins QAM Deal.)

— Jeff Baumgartner, Site Editor, Cable Digital News




Interested in learning more on this topic? Then come to Cable Next-Gen Video Strategies: Competing in the Three-Screen World, a one-day conference that will take a comprehensive look at the cable industry's attempts to generate revenues and fend off its rivals by deploying next-generation video technologies. To be staged in Atlanta, June 25, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.


Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE