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Video hardware

RGB Remakes Itself for Global Growth

With an initial public offering (IPO) still on the radar, digital gear specialist RGB Networks Inc. has several changes afoot that, it hopes, will allow it to diversify its revenue streams with new telco customers and carve out a deeper presence in Asia. While some of those changes could impact or augment product lines, some of the early modifications will affect RGB's international sales force and its ability to ring up some telco deals and hit pay dirt outside the U.S. and Europe. CEO Jef Graham shot down a rumor that RGB had laid off its entire sales force dedicated to the EMEA (Europe, the Middle East, and Africa) region, but did confirm that Sarah Hackforth, the current international sales VP who is based in the U.K., is leaving the company by the end of September, but staying on board to help find a replacement. "We have not closed any sales offices," Graham says, noting that RGB today employs six in Europe and five in Asia, and expects to hire a telco rep for Europe and a sales manager for China. "This is just a focus on basically the leader, with the skill sets appropriate to where we are," he insists. Hackforth's successor will have a background tailored to help RGB expand beyond Europe and, in particular, cable. "We've seen more demand in Asia and more demand in telco than we are seeing with cable," Graham says of RGB's international prospects. Although RGB is looking to help the company overcome typical language barriers, it also sees Asia as a better international playground for its ad-insertion systems, which are illegal in some Western European countries. "So, to some extent, there's a natural bias here toward telco in Asia," says Graham, who intends to announce the new international sales chief in time for next month's IBC show in Amsterdam . RGB's Graham claims that 25 percent of the company's business comes from outside the U.S. By comparison, BigBand Networks Inc. (Nasdaq: BBND), which some consider to be RGB's closest competitive foil, reported that 12 percent of its revenues came from international customers in the second quarter of 2009. But the telco market is a completely fresh one for RGB, as the vast majority of its revenues still come from MSOs. "Cable will still be the biggest for quite a while," Graham predicts. "But the new and emerging stuff is telco." IPO still the goal
More broadly speaking, RGB's geographic and market-diversification strategy plays into its overarching desire to go public. "What I'm after is predictability," Graham says. "The most important thing you can be as an early stage company is predictable." Graham says the "current thinking" is to go public after Labor Day of 2010, so roughly a year from now. But, he laments, the ups and down at BigBand, which went public in March 2007, haven't helped. (See BigBand Dives on Soft Q3 Warning and BigBand IPO: Boing!) "If we went up today, they'd be the most direct comparable company, so they are no help to us," he says. "So I'm hoping they disappear." [Ed note: To clarify that, he's hoping BigBand gets acquired by a larger company and not that it simply goes poof.] But this is just the latest coat of paint to be splashed on RGB's yearning for an IPO exit. Market forces have prevented it so far, putting off the time when RGB thinks it can finally pull the trigger without too much risk. (See RGB Still Gunning for an IPO , RGB Gets More Green, and RGB Raises $20M More.) Graham says the Sunnyvale, Calif.-based company has enough cash to sit tight for a while. According to Graham, the company beat its target numbers in the first and second quarter of 2009. RGB brought in about $11 million in the second quarter, a 32 percent year-over-year increase, and notched record sales for its Broadcast Network Processor (BMP), a digital video grooming product. There are also personnel changes afoot at RGB that Graham believes will help it position for an IPO. For starters, he's close to bringing in a new CTO (an IP video "luminary"), also in time for IBC. That could be key, because Peter Monta, an RGB founder and former chief scientist has left, and Edward Krauss, another founder and CTO, is now only part time. EVP Adam Tom (another RGB founder) is still "very active" with business development. "There's no change to what he is doing," Graham notes. — Jeff Baumgartner, Site Editor, Cable Digital News

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