SeaChange Revenues Dip 6% In Q4

But Shows Signs Of RDK-Based Deal Action
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SeaChange posted fourth quarter revenues last week of $35.6 million, down 6% versus the previous quarter led by a 28% decline in product revenue and amid its ongoing attempts to shift business away from its legacy product line.

The drop was expected, as the company announced in February that fourth quarter results would miss their anticipated targets due in part to order delays. At the time, it said its revised fourth quarter revenues would be in the range of $34.5 million to $35.5 million, down from prior guidance of $40 million to $45 million.

“As we noted during our preliminary results conference call a few weeks ago, this disappointing performance was the result of delays and expected orders from customers primarily in the Americas combined with continued delays in final product acceptance,” company CEO Raghu Rau said in a conference call with analysts on Thursday (April 3).

He said SeaChange expects the shortfall to be “short-term,” as revenues on legacy products fade and new product revenues begin to ramp up more substantially.

On that point, Raghu said legacy products accounted for about 75% of total product revenue in the first quarter of 2012, noting that the revenue base from that category has dropped by more than 20% in each of the last two fiscal years, accounting for a loss of $10 million to $15 million of total annual revenue. The new product pipeline, meanwhile, has grew to two-third of product revenue in SeaChange’s fiscal fourth quarter, he said.

He said SeaChange anticipates fiscal 2015 as being the “third and final year of our transition, after which legacy product declines are unlikely to be material.”

SeaChange’s new product line includes Adrenalin, a multiscreen video backoffice platform, its Infusion advanced ad platform, and video gateway software based on the Reference Design Kit (RDK), which is being managed by a joint venture run by Comcast and Time Warner Cable. Liberty Global recently became a member of the J.V.

Raghu said SeaChange recently won three new design wins for Nucleus, including two with service providers and one with an equipment vendor, on top of two earlier wins.

SeaChange ended its fourth quarter fiscal 2014 with cash, cash equivalents and marketable securities of $128.1 million and no debt, versus $126.4 million at the end of the previous quarter.

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