Vyyo Wins Cox, Points to Others
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 4/2/2007
Vyyo said Cox will first use its 3GHz taps and passive network elements for its business services in selected areas and the MSO will expand the capability of its new-build systems using Vyyo's gear as well.
In its fourth-quarter earnings call with analysts this morning, Vyyo executives declined to specify how much the Cox order is worth. But Vyyo noted Cox buys hundreds of thousands of passive network devices each year.
"We assume that we will have a large part of the second-half of the year [orders]," said Avner Kol, COO of Vyyo. At an average cost of about $30 per device, he said, that will mean significant revenues for Vyyo over the last six months of the year.
Vyyo officials said that two other major North American cable operators are also evaluating the company's out-of-band technology for trial deployments. Although Vyyo officials declined to name the MSOs, analysts who cover the company have identified Comcast Corp. (Nasdaq: CMCSA, CMCSK), Charter Communications Inc. , or Cablevision Systems Corp. (NYSE: CVC) as the most likely candidates.
As a result, Vyyo executives said they're now focusing almost exclusively on the North American cable market. Although the company's wireless data products for the utility industry now account for most of its revenue, they see much greater promise in the cable spectrum overlay business.
"We are gearing up for mass production" of 3GHz equipment, said Davidi Gilo, chairman of Vyyo. "The larger opportunity for Vyyo is in the cable market."
Likewise, Vyyo executives said they don't anticipate great near-term demand for their T1 wireless backhaul product. While they still see strong potential for cable operators to offer T1 commercial services, they believe that won't happen until MSOs add more bandwidth, particularly on the upstream side.
"We believe greatly in the potential of T1 and business services," Gilo said. "But we don't expect to see a lot of deployment of T1 until customers install 3GHz passives."
Despite the new order from Cox and the contract with Singapore MSO StarHub announced last month, Vyyo officials cautioned that they don't expect revenues to spike much over the first six months of this year. "Our revenues will remain lumpy and unpredictable in the short term," Gilo said. "We don't expect significant revenues until the second half of the year."
Vyyo reported $8.0 million in revenues for the full year, up from $2.4 million in 2005 but once again below analyst estimates of at least $8.5 million. The company lost $29.4 million in 2006, compared to $38.7 million in 2005.
Two analysts lowered their 2007 earnings estimates for Vyyo earlier today. Oppenheimer & Co. analyst Alan Bezoza now expects the firm to lose $25.0 million on $30.9 million in revenues this year, while ThinkEquity LLC ' Anton Wahlman expects Vyyo to lose $4.9 million on $64.6 million in revenues.
— Alan Breznick, Contributing Editor, Cable Digital News