BigBand Cuts 5% Of Workforce

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Video-equipment vendor BigBand Networks said sales for the first quarter exceeded expectations, although the company also announced that it cut 5% of its workforce, or about 25 employees, earlier this week.

BigBand CEO Amir Bassan-Eskenazi said the company’s switched digital video system has now been deployed in cable systems passing 14 million households, up from 12 million in the previous quarter.

For the first quarter of 2008, total revenues were $39.9 million, compared with $30.7 million reported in the fourth quarter of 2007 and $52.8 million in the first quarter of 2007. BigBand had projected Q1 revenues to be $35 million to $39 million.

Net loss for the quarter was $1.9 million, or $0.03 per share, compared with a net loss of $13.8 million ($0.23 per share) in the fourth quarter of 2007 and a net loss of $1.0 million ($0.05 per share) in the first quarter of 2007.

In the first three months of 2008, the company saw higher gross margins -- 61.1%, compared with 57.5% in the year-prior period -- because of an increase in software sales and an expansion of SDV orders, Bassan-Eskenazi said.

Bassan-Eskenazi said several customers expanded their SDV deployments, calling out Cablevision Systems’ move to deliver the 15 VOOM HD Networks channels using SDV.

BigBand CFO Maurice Castonguay, however, said those particular trends are not expected to continue into the next few quarters.

Comcast, Bassan-Eskenazi said, is “still in the process of” evaluating its SDV deployments. BigBand's top five customers accounted for 80% of revenues in the quarter, compared with 75% for the full-year 2007. Its client roster includes Cablevision, Charter Communications, Cox Communications, Time Warner Cable and Verizon Communications.

While BigBand expects Verizon to remain a “very significant” customer, Bassan-Eskenazi said, the telco will not represent as big a portion of total revenue as in the past.

The company’s layoffs this week will result in a charge of approximately $0.4 million for employee severance and a $0.8 million charge for facility-related expenses for the second quarter.  The move was taken to “redeploy scarce resources” and refocus efforts on the SDV market, Castonguay said.

BigBand ended the first quarter with 496 employees, compared with 518 at the end of 2007 and 603 at the end of Q3 2007. In November, the company announced it would lay off about 100 employees -- 15% of its workforce -- and that it would discontinue its Cuda cable-modem termination system.

As of March 31, BigBand’s deferred revenue was $63.7 million, down from the prior quarter's balance of $67.3 million. The company ended the first quarter with $150.0 million in cash and equivalents compared with $154.5 million as of Dec. 31.

For the second quarter, BigBand expects net revenues to be in the range of $40 million to $43 million with net loss to be between $0.07 and $0.10 per share.

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