BigBand Sales Fall, As SDV Rollouts Hit 33 Million Homes
Company Posts 25% Drop in Revenue for 2009; Forecasts 10% Sales Growth for 2010
By Todd Spangler -- Multichannel News, 2/5/2010 2:13:43 PM
BigBand Networks has now deployed or is in the process of deploying its switched digital video solution in cable systems passing 33 million homes -- up 5 million from the previous quarter -- but its sales for 2009 were down 25% and one Wall Street analyst has suggested that the company's biggest SDV opportunities are over.
For the fourth quarter of 2009, the company reported $34.4 million in sales, down 36% from the year prior, and a net loss of $1.2 million versus net income of $7.3 million in the fourth quarter of 2008.
For 2010, BigBand expects revenues to grow 10% compared with last year, a target that was below analyst expectations. The company's 2009 revenues were $139.5 million, compared with $185.3 million the year earlier, and it reported a net loss of $6.7 million compared with net income of $9.8 million in fiscal year 2008.
"Our fourth-quarter performance marks the positive conclusion to 2009, despite the challenging macroeconomic environment," BigBand president and CEO Amir Bassan-Eskenazi said in announcing the results. "During the year, we continued to win strategic footprint and align with our customers to deliver solutions that tie to the trends of HD, TV Everywhere and, ultimately, 3DTV."
BigBand's expanded SDV footprint in the quarter was largely driven by Time Warner Cable's ongoing deployment of the BigBand system in New York City, Los Angeles and Dallas. In the fourth quarter, Time Warner Cable represented roughly 40% of BigBand revenue, with Bright House Networks, Charter Communications, Cox Communications and Verizon Communications each representing more than 10% of total revenue.
But the bulk of BigBand's SDV deployments "may be behind the company," George Notter, Jefferies & Co. managing director of communications equipment equity research, wrote in a research note Friday.
"We continue to have concerns about the size and trajectory of the SDV market, and in turn BigBand's ability to grow revenue in 2010 and beyond," Notter wrote.
Comcast chief financial officer Michael Angelakis, on the company's earnings call Wednesday, mentioned switched digital video among the projects the MSO will fund through the newly formed Comcast Labs. The new initiatives, which also include converged products and IP technology, will be part of Comcast's discretionary capital expenditures and will represent less than 5% of total capital, he added.
Notter does not expect BigBand to see any significant business from Comcast in the near term, given the operator's focus on analog reclamation near-term, along with Comcast's selection of Harmonic and Arris for edge QAMs and the fact that most of its systems are Motorola headends while BigBand's historical strength is in Scientific Atlanta systems.
Notter maintained his "hold" rating on BigBand: "At this point, we're inclined to remain on the sidelines despite the apparent cheapness of the stock," he wrote. Based on BigBand's lowered expectations for 2010, Notter anticipates sales of $141 million and a net loss of 40 cents per share for the year.
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