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SeaChange Racks Up Bigger Loss in Q1

Despite resurgent video-on-demand (VOD) system revenues, SeaChange International suffered a much wider loss in its latest reporting period due to sharply higher operating expenses.

SeaChange, a leader in the cable VOD equipment and software business, reported a net loss of almost $4.4 million in its fiscal 2007 first quarter, ended April 30. That compares with a net loss of nearly $600,000 in the year-earlier period.

The Acton, Mass.-based cable tech manufacturer recorded the bigger loss even though its overall revenues climbed to $33.2 million, up 5.5 percent from $31.5 million a year ago. In particular, the company's broadband division, which covers VOD and ad insertion hardware and software, shined during the quarter. The broadband unit generated $16.3 million in revenue, up $2 million from the final quarter of fiscal 2006.

In its earnings report, SeaChange attributed most of the revenue gain to "a significant rise" in VOD system orders from U.S. and Canadian cable operators. The company said VOD system revenue jumped to $10.8 million in the first quarter, up 71 percent from $6.3 million in the previous quarter.

But SeaChange's net loss still increased by sevenfold on a year-over-year basis because of much higher R&D costs, greater general and administrative expenses, and lower ad insertion and other revenues. In addition, the company made an $8 million payment in April as part of the settlement of its long-running legal duel with VOD server rival nCUBE, which is now part of C-COR Inc.

SeaChange President & CEO Bill Styslinger said company officials "expect to see VOD revenues continue to grow significantly in the second quarter." He boasted that Q2 VOD system shipments and unfilled orders "have already exceeded" the company's total VOD revenue for last year's fourth quarter.

Styslinger said the tech vendor is now negotiating "several multiyear software, hardware and service purchase agreements" that it expects to close over the rest of the year. But he declined to name the potential customers.

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