BigBand Provides IPO Update
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 2/26/2007
In an S-1/A filing with the Securities and Exchange Commission (SEC) earlier today, BigBand says it plans to offer up 7.5 million shares of its common stock to the public. Existing stockholders will sell another 3.2 million shares and the company's underwriters would make another 1.6 million shares available, if demand is high enough.
The company had said earlier it was aiming to raise $140 million by an IPO.
Looking just at its 7.5 million shares, BigBand estimates that it will reap net proceeds of $74.3 million on the IPO, assuming the shares sell initially for $11 apiece. The company intends to use the proceeds to pay off $14.0 million in debt and for working capital, capital expenditures, and other general corporate purposes.
BigBand says it "may also use a portion of our net proceeds to fund acquisitions of complementary businesses, products, or technologies." But the cable and telco equipment supplier says it has no deals on the table right now.
Similar to BigBand's initial S-1 filing two months ago, the updated prospectus doesn't reveal much more about the company's future plans. But it does provide more information about the firm's growing business. (See BigBand Files for IPO.)
BigBand, which rang up its first quarterly profit in the third quarter of 2006, leaped deeper into the black in the fourth quarter. The company reported net income of $8.9 million on $63.0 million in revenues in the fall period, up from a profit of $1.6 million on $43.1 million in revenues over the summer. In the year-ago period, the firm lost $5.7 million on $26.7 million in revenues.
Likewise, BigBand recorded its first annual profit last year, earning $8.9 million in net income on $176.6 million in revenues. That's a turnaround from a loss of $25.5 million on $98.0 million in revenues in 2005. The company credited its 80 percent increase in annual revenues primarily to its video products, particularly its switched digital video equipment.
Verizon Communications Inc. (NYSE: VZ) and such large U.S. MSOs as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. make up an ever-growing share of BigBand's business. In its latest filing, the company says sales to its five biggest customers accounted for about 90 percent of its revenues in the fourth quarter and 79 percent of its revenues for the entire year, up from 69 percent in 2005.
BigBand says international sales generated $19.2 million in revenues last year, or 11 percent of its total. But, updating a disclosure in its original prospectus, the company revealed it has now deferred about $5.1 million in revenues from Chinese customers because of disputes over contract terms.
In one other notable disclosure, the filing indicates that Gil Kaufman, BigBand's executive VP of worldwide engineering, has quietly left the company. There was no word on where Kaufman went or who has replaced him.
— Alan Breznick, Site Editor, Cable Digital News