Q1 Tech Sales Mostly Softer

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With cable operators trimming capital spending, most of the industry’s video and data equipment suppliers suffered weaker sales for first-quarter 2009.

Last week, Cisco Systems and Harmonic reported double-digit declines in revenue, following similar drops for Motorola and Arris Group last month.

One exception: BigBand Networks, which turned in a relatively strong first quarter with $43.9 million in revenue, up 10% over the year-ago quarter. BigBand net income for the first quarter of 2009 was $2.3 million — which included special charges related to the layoff of 46 employees — versus a $1.9 million net loss last year.

“While we are cautious about the near-term outlook as it relates to service provider spending, we are optimistic about the long-term prospects for our business,” BigBand president and CEO Amir Bassan-Eskenazi said in a statement.

For the second quarter of 2009, BigBand expects net revenue in the range of $40 million to $42 million, with earnings coming in either breakeven or at a net loss of 2 cents per diluted share.

BigBand also announced the first commercial deployment of its IPTV-for-cable solution, by Korea’s LG Powercom, which is the vendor’s first international customer to represent at least 10% of sales. LG Powercom is using BigBand’s video IP solution, vIP Pass, to deliver video to PCs and IPTV set-tops. In addition, BigBand said it has shipped 500,000 edge QAMs.

Video-equipment vendor Harmonic, meanwhile, cited cable as a bright spot in an otherwise tough quarter.

For the quarter ended April 3, Harmonic reported net sales of $67.8 million compared with analyst expectations of $75.2 million. Sales were down 22% from $87.3 million in the first quarter of 2008, driving Harmonic’s share price down more than 21% last Tuesday. Cable represented 57% of revenues, followed by satellite at 23% and telcos and broadcast at 20%.

The company reported a first-quarter net loss of $18.8 million, which included charges totaling $11.9 million, primarily related to the acquisition of Scopus Video Networks, compared with net income of $13.4 million for the same period of 2008.

Harmonic said the lower-than-anticipated net sales were the result of “continuing weakness in the customer order rate across many different markets” in the period, but noted that volume appeared to be trending back up in the current quarter.

Cisco’s video systems sales were down 5% year-over-year for its fiscal third quarter 2009, which ended April 25. In addition, Cisco’s total service provider orders for the quarter were down 33% globally, and down approximately 30% in the U.S.

Overall, Cisco reported net sales of $8.2 billion for the quarter, down 16.6% from the same period last year, and net income of $1.3 billion, down 24% year-over-year.

At the same time, chairman and CEO John Chambers sounded a hopeful note, speaking on Cisco’s earnings call last week. For the first time “in many quarters” customers are “seeing some stabilization, a leveling out,” he said.

First-quarter sales generally declined among cable-tech vendors:
Q1 2009 Sales vs. Year Ago

Cisco Systems*






Arris Group


BigBand Networks