BigBand Strikes Up a Boffo $90.7M IPO

3/16/2007 8:07 PM Eastern

BigBand Networks, the first cable-technology company to go public since 1999, saw its stock run up 31% during its opening day of trading last week.

The company’s shares closed at $17 in its first day of trading on March 15, up $4 over the $13 initial offering price. The offering, which went out above the $10 to $12 per share BigBand had expected, netted the company $90.7 million after commissions and other fees.

As of midday last Friday, the stock was trading at $16.55. BigBand, listed on NASDAQ under the symbol BBND, sold about 7.5 million shares in the IPO and other stockholders sold 3.2 million.

BigBand became the most notable cable-tech IPO since interactive TV software vendor OpenTV went public in 1999.

BigBand sells video-processing and data-networking equipment to more than 100 customers worldwide. Those include the top five U.S. multiple-system operators — Cablevision Systems, Charter Communications, Comcast, Cox Communications and Time Warner Cable — and Verizon Communications.

The Redwood City, Calif., company faces its biggest competition from cable’s tech powerhouses, Cisco Systems and Motorola.

But BigBand is betting it has a competitive leg up in switched digital video, a category it pioneered. The technology delivers a video stream only when a viewer requests it. That lets operators offer a broader array of programming using the same amount of bandwidth, with the assumption that not every program will be watched simultaneously on a given segment of the cable network.

Cablevision, for one, is using BigBand switched-video gear to offer nine international programming packages to all of its 2.3 million digital-cable subscribers. The rollout was touted as the largest deployment of switched digital video to date, in terms of the number of homes passed.

In an S-1 filing with the Securities and Exchange Commission, BigBand said it intends to use the cash from the initial public offering to pay off $14 million in debt with Silicon Valley Bank, and use the rest as working capital and for other general corporate purposes. The company also said it may use the funds to acquire businesses, products or technologies.

The Redwood City, Calif.-based company filed for an IPO Dec. 22. The firms underwriting the offering were Morgan Stanley, Jefferies & Co., Cowen & Co., ThinkEquity Partners and Merrill Lynch.

BigBand’s three biggest shareholders remain its original venture-capital backers, none of which sold shares into the offering: Redpoint Ventures, which owns 13 million shares (22.5% of post-IPO shares); Charles River Ventures, 11 million (19% of shares); and Meritech Capital Partners, with 4.9 million (8.5%).

Time Warner Inc., another of BigBand’s investors, sold 360,140 shares in the IPO, leaving it with a 2.9% ownership stake.

Snapshot: BigBand Networks
Source: Company reports
Business: Systems to process, optimize and deliver digital video, broadband Internet, and voice over Internet Protocol services
Key Executives: Amir Bassan-Eskenazi, CEO and president; Ran Oz, CTO
Key Customers: Cablevision Systems, Charter Communications, Comcast, Cox Communications, Time Warner Cable, Verizon Communications
Headquarters: Redwood City, Calif.
Founded: December 1998
No. of Employees: 562
Financials: $176.6M in revenue and $8.9M net profit for year ended Dec. 31, 2006

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