SeaChange Profits in Q4
The company posted fourth quarter revenues of $47.8 million, up 19 percent, beating Wall Street estimates of $46.7 million. SeaChange's broadband segment, which includes VOD and ad insertion, notched revenues of $23.7 million. VOD contributed $18.9 million of that total, up 16 percent from a year ago.
SeaChange also swung to a profit of $14.6 million (48 cents per share), aided in large part by the recent sale of its one-third stake in the U.K.-based FilmFlex Movies venture to The Walt Disney Company and Columbia Pictures Corp. Ltd. (See SeaChange Sheds FilmFlex Stake.) Without gains from that deal, fourth quarter net income was $2 million. SeaChange posted a net loss of $3.7 million in the year-ago quarter.
Speaking Thursday afternoon, SeaChange CEO Bill Styslinger said the company is continuing to see some "meaningful revenue" from its decision to decouple and market its "Axiom" VOD backoffice separately from its video server hardware. SeaChange did not provide any specific financial figures to back that up, but its decoupling strategy appears to be picking up some steam in terms of MSO adoption.
Styslinger confirmed that Axiom is operating in tandem with Concurrent Computer Corp. (Nasdaq: CCUR)'s MediaHawk 4500 server for Cox Communications Inc. 's VOD deployment in Phoenix. (See Cox Closes VOD Gap .)
He said another three Cox sites have signed up use Axiom for similar integrations. "We expect Phoenix will be the model for Cox going forward," Styslinger said. During the fourth quarter, SeaChange secured a total of six new backoffice software deals.
But that product separation tactic appears to be less of requirement for operators outside the U.S. "Many customers, especially our international ones, see a solution-based offering as mandatory," said company chief strategy officer Yvette Kanouff. "Having our own hardware offering remains critical."
On the server front, SeaChange recently secured the first commercial shipment for its Flash-based server -- with Cablevision Mexico. (See Cablevision Mexico Gets Flash With VOD and A Flashy Approach to VOD.)
SeaChange also expects to play a key role in Project Infinity, a Comcast Corp. (Nasdaq: CMCSA, CMCSK) initiative that, starting sometime next year, will offer more than 6,000 movies a month on-demand, with more than half of that total delivered in hi-def format. (See Comcast Launches 'Project Infinity'.) SeaChange has a master agreement with the MSO, which came to light in the second half of 2006. (See Comcast Boosts SeaChange Revenues.)
"Our relationship with Comcast is strong and we expect that to continue as Project Infinity is rolled out," Styslinger said.
Not as strong has been SeaChange's stock price. The company tried to pump that up last month via a $20 million repurchase program. (See SeaChange to Buy Back Stock.)
"We think the stock is a good buy," Styslinger said.
At least one analyst agreed. Late Thursday, B. Riley & Co. Inc. reiterated its "Buy" rating on SeaChange and a target of $11 per share.
SeaChange shares were up $0.28 (4.49%) to $6.51 each in midday trading Friday.
— Jeff Baumgartner, Site Editor, Cable Digital News