Video hardware

BigBand Cuts Staff as Orders Dry Up

Digital video specialist BigBand Networks Inc. (Nasdaq: BBND) has cut 6 percent of its workforce, roughly 30 people, as first-quarter revenues dropped 27 percent and the vendor missed its guidance.

On Thursday's earnings conference call, BigBand president and CEO Amir Bassan-Eskenazi blamed the quarterly drop primarily on delays in purchasing decisions, particularly those involving new technologies, including new IPTV gear for cable MSOs and telcos alike. BigBand also reported a lower contribution from its typically lucrative edge QAM product line, as margins were squeezed by increasing price pressure.

"We need to complete some product development and customer qualification processes before we reach commercial deployment," he said, noting that the cuts were necessary so BigBand could "refocus our development initiatives on strategic projects that are expected to drive significant growth in 2011 and beyond, while tightly controlling our cash burn during 2010."

BigBand ended the quarter with $165.5 million in cash. It said the headcount reduction and other related moves will result in annual costs savings of $7 million.

Those cuts come approximately two months after the company shook up its executive ranks and appointed a new, independent chairman, a move that was partially designed to free up Bassan-Eskenazi to become more involved in BigBand's day-to-day operations. (See BigChanges at BigBand .)

BigBand CFO Ravi Narula said Thursday the employee cuts involved "all functions and all locations," and that BigBand still had "close to 476 employees" after the layoff.

The vendor's first-quarter revenues were $32.2 million, down from $43.9 million a year ago, while it reported a GAAP net loss of $8.8 million (13 cents per share), versus net profit of $2.3 million (3 cents per share). The company had earlier issued guidance that put expected revenues at $33 million to $35 million, and a GAAP net loss of 9 to 11 cents.

Time Warner Cable Inc. (NYSE: TWC) was BigBand's largest customer in the quarter, representing 44 percent of the pie. Cox Communications Inc. and Verizon Communications Inc. (NYSE: VZ) were BigBand's other 10 percent-or-greater customers.

One relative bright spot in a dreary quarter was switched digital video (SDV), with BigBand claiming to have its tech deployed, or in the process of being deployed, in 35 million homes, up from the 33 million reported at the end of the fourth quarter of 2009.

Looking ahead, BigBand now expects second-quarter revenues to be in the range of $26 million to 28 million, down from Wall Street expectations of $36.2 million. It's now forecasting 2010 revenues of $115 million to $125 million, short of the $151 million expected by analysts.

— Jeff Baumgartner, Site Editor, Light Reading Cable

DCITDave 12/5/2012 | 4:36:57 PM
re: BigBand Cuts Staff as Orders Dry Up The sector seems to be doing well. Broadband demand is up, as ever. The craving for linear channels hasn't slackened. And then there's BigBand playing sour notes in an old tuba. What's going on with these guys?
Jeff Baumgartner 12/5/2012 | 4:36:56 PM
re: BigBand Cuts Staff as Orders Dry Up Cable capex continues to decline and what pickup BBND got with SDV hasn't been enough to make up for it. BBND's also fairly reliant on Verizon and it doesn't help them if VZ's slowing its FiOS buildouts. More broadly, I think they are still too reliant on its small base of large customers, which has been a historical problem that they haven't been able to correct yet. It's nice to have big customers, but when they sneeze, it's companies like BBND that catch pneumonia.

They're also betting big on IPTV adoption by cable, and I'm getting the obvious sense that the ramp for that isn't as steep as they thought it would be by now. JB

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