Concurrent Blames VoD Spending Cuts
"Q4 revenue was impacted by reduced spending and project delays, but not cancellations, within a few of our top MSO customers," company president and CEO Dan Mondor said in this morning's conference call with reporters and analysts. He characterized that drop as temporary, with a "bottoming out" expected during the company's first half of fiscal 2010. But Mondor doesn't expect a market recovery until the second half of the company's current fiscal year.
Mondor said the slower spending involved some of Concurrent's strongest North American cable customers, but didn't reveal any by name. Concurrent's 10-Q filed in May identified three 10 percent-or-greater customers, unhelpfully listing them generically as customers A, B, and C. Time Warner Cable Inc. (NYSE: TWC), Bright House Networks , and Cox Communications Inc. are among Concurrent's larger U.S.-based MSO partners. The vendor revealed last year that its servers and software won't factor in Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s next-gen VoD project. (See Concurrent Not in Comcast's VOD Future and Comcast Launches 'Project Infinity'.)
Concurrent posted fourth-quarter revenues of $15.9 million, down 9 percent year-over-year, and down 17 percent versus the previous quarter. But that was still enough to eke out fourth-quarter net income of $245,000 (3 cents per diluted share). However, gross margins jumped 5 percent (to 59 percent) versus the year-ago period. (See Concurrent Posts Q4.)
Concurrent hopes to score growth with upgrades that let MSOs deliver VoD (and ads) to PCs and mobile handset screens, and has some partnerships in place to help make that happen. However, its primary domestic competitors for servers and back-office systems, including SeaChange International Inc. (Nasdaq: SEAC), Tandberg Television , Arris Group Inc. (Nasdaq: ARRS), Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), and relative newcomer Verivue Inc. (which has a deal with Arris), all have similar aims. (See Concurrent Upgrades for Mobile & PC VoD, Concurrent, Clearleap Announce Web TV Partnership, Tandberg Takes One-Stream, Any-Screen Approach, Arris Pumps Up Video With Dolce's Verivue , and Verivue Surfaces With Comcast Backing .)
But Concurrent couldn't say when it expects that strategy to pay off. Mondor said the vendor expects to see three-screen rollouts during the next fiscal year but wasn't more specific on timing or anticipated volumes.
Concurrent shares were down 17.79 percent ($1.00), to $4.62 each, in midday trading Wednesday.
— Jeff Baumgartner, Site Editor, Cable Digital News
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They just published their 10-K, noting that Cox accounted for 19% of revenues for the fiscal year ended June 30, with Time Warner at 18%. No other customers accounted for more than 10 percent in that fiscal year, but it lists Bright House Networks, Cogeco, Inc., and Videotron among its other "primary" customers.