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BigBand CEO's E-mail to Employees About Arris Takeover

10/14/2011 4:16 PM

BigBand Networks is about to get absorbed into Arris, in the cable-tech sector’s latest vendor-consolidation play (see Arris To Buy BigBand For $53 Million).

BigBand pioneered switched digital video — with great success — but has since “struggled to find a ’second act,’” as Jefferies & Co.’s George Notter wrote in a research note.

The steady drop in revenue led to several rounds of layoffs: BigBand had 401 employees at the end of the second quarter of 2011, after counting 465 employees at the end of 2010.  It cut 100 employees in November 2007, leaving it with about 500 at the time.

Now, with the Arris deal, more BigBanders are facing the prospect of losing their jobs.

Arris hasn’t disclosed expected headcount reductions but said in its investor presentation about BigBand that it plans to “optimize cost structure consistent with current sales levels,” targeting $7 million in quarterly opex savings by Q3 2012 — which will be “primarily realized in Q1 2012.”

Against that backdrop, BigBand CEO Amir Bassan-Eskenazi tried to put positive light on the deal in an e-mail to company employees Tuesday, as disclosed by in an SEC filing.

Here’s the full memo:

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BigBand Team,

Earlier today we announced that BigBand and ARRIS have entered into a definitive agreement whereby ARRIS will acquire BigBand Networks under a tender offer. The press release is attached.

This is obviously a big development and I wanted to share with you what this means and what will happen next.

I believe this is a very good development for our share holders, customers, and employees:

BigBand has built some incredible products and continues to develop strong and differentiated technologies that I believe are destined to have a great impact on the cable and telco markets. The combination with ARRIS will greatly strengthen our ability to rapidly sell and deploy these products via ARRIS’ strong worldwide distribution channel and leadership position in North American Cable that complement our own relationships.

Secondly, the combined company portfolio of products including ARRIS’ CMTS (and its’ transition to CCAP), video ad servers and IP video distribution systems & CPE will, in my opinion, be extremely well positioned in the market place to compete and offer innovative solutions. This broader platform can also be differentiated with the addition of BigBand’s “secret sauce”, which should generate broader opportunities.

The world of IP Video has arrived. I believe the industry’s strategic transition into this world requires a diversified portfolio of products and capabilities as well as a strong balance sheet that the combined company will be able to offer. In short, I believe that the combined company will be a great vehicle to realize the very vision that guided BigBand from the time we started it, 12 years ago.

I’d like to take this opportunity to thank you for the hard work you have all put into building the company. And especially the recent effort in bringing the MSP platform to market and achieving the first wins of the recently released Advertising and QAM applications.

I am very proud of what we have achieved together and the amazing team you all are. It was a privilege I will always be proud of - to be your leader: We have developed solutions that some questioned whether they can in fact be built. And then we proved it, deployed it, and scaled it to tens of millions of subscribers. We have become a world recognized innovator, and have built platforms and technologies that are very impressive.

We created an organization that is very important to our customers and whose expertise and responsiveness are well known and appreciated in the market. I am looking forward to all the great things that will come from this group as we step to the next phase in the evolution of this opportunity, as a combined company with ARRIS.

I know you will continue to make me even more proud!

Over the next several weeks, while we await regulatory and shareholder approval, the BigBand and ARRIS teams will begin planning the transition to one organization, making sure to understand the strengths of each organization and to build upon them. So let’s stay focused on the business - we have to continue serving our customers, building to our roadmap and making progress on executing our plans.

Many decisions have yet to be determined but we expect ARRIS will keep all of BigBand’s existing products and all of our roadmap commitments. Similarly, I felt it was important to let you know that there is no plan to exit any of our current locations i.e. Redwood City, Westborough, Tel Aviv or Shenzhen. We will communicate with employees as the process proceeds, in anticipation of a closing date in late 2011.

Today we will be holding ALL HANDS meetings at each site. I will be joined by Bob Stanzione, CEO of ARRIS, and Bruce McClelland, President of the Broadband Communication Systems. We will discuss the announcement in more detail, explain what it means and take your Q&A.

See you all there.

Amir

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