BigBand Says Q3 Revenues Will Be Off As Much As 40%
Equipment Maker Blames Longer-Than-Expected Switched Digital Video Rollouts, Lower Telco Revenue and ‘Soft’ Data Business
By Todd Spangler -- Multichannel News, 9/27/2007 7:42:00 AM MT
BigBand Networks on Thursday warned it would miss revenue expectations for the quarter ending Sept. 30, with the company now expecting to report revenue of $35 million to $39 million compared with its previous guidance of $54 million to $58 million.
With the lower revenue expectations, BigBand expects to report an operating loss for the third quarter of 2007. The company, which sells switched digital video systems, cable modem termination systems and other equipment, said the lower revenue outlook is “due to several coincident factors.”
First, BigBand said some ongoing switched digital video deployments “have required more software customization and integration than originally expected.” As a result, the company said, it was unable to recognize SDV revenue for some deployments in the third quarter. Most recently, BigBand announced that Cox Communications’ Northern Virginia division was deploying its switched digital video system.
In addition, BigBand said it also experienced a slowdown in revenue from telephone companies as “its major customer worked through some previously purchased inventory.”
Verizon was BigBand’s single largest telco customer – and its single largest customer overall – for the first nine months of 2006,
according to its S-1 filing.
For that period, Verizon represented 27% of sales, or about $30 million of BigBand’s $113.6 million in revenues over the nine months.
Finally, the company said it experienced “continued softness in its data business.” BigBand last month said it had “slightly reduced” the size of the cable-modem termination system development team based in the United States but said it had hired about the same number of employees in China to support ongoing maintenance of existing CMTS products.
In a statement, BigBand CEO Amir Bassan-Eskenazi said: “While we believe the market for our video solutions continues to be strong and are confident in our roadmap for the long term, we are clearly disappointed in our execution this quarter. We are aggressively addressing these issues and will provide more specifics in our announcement of third quarter financial results in early November."
BigBand went public in March, netting $90.7 million in an IPO in which its stock ran up 31% during its opening day of trading. The company’s shares closed at $17 in its first day of trading on March 15, up $4 over the $13 initial offering price. BigBand shares have since declined, closing at $9.07 on Thursday.
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