SeaChange Sales Slip In Q2

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SeaChange International posted an 8% drop in sales and swung to a net loss for the second quarter, but the vendor touted deals with Comcast and other customers in forecasting improving demand for video-on-demand systems and software in the second half of the year.

For the three months ended July 31, SeaChange's fiscal 2010 second quarter, the company posted $46.5 million in revenue and a net loss of $400,000, compared with $50.7 million in revenue and net income of $1.5 million in the year-prior period. SeaChange reported earnings after the market closed on Sept. 1.

During the quarter, SeaChange extended its subscription agreement with Comcast for VOD software through the end of 2009 and began commercial deployments of its VOD servers and software for Comcast's next-generation VOD network architecture, dubbed Project Infinity. The financial terms of the Comcast extension weren't disclosed.

SeaChange also landed one of the top five U.S. operators as a software subscription customer in the quarter, replaced two competitors' products at another domestic cable television customer and added six new other U.S. customers including four small telcos.

Earlier Tuesday, SeaChange said it was acquiring eventIS Group B.V., a VOD management software company based in the Netherlands, in a deal worth $39.4 million over three years. SeaChange's second-quarter net loss reflected $500,000 in acquisition-related costs.

"Despite a challenging economic climate that has negatively impacted our advertising insertion and broadcast product lines, we are pleased that, excluding one-time acquisition-related costs, we were able to show a profit for the second quarter," SeaChange chairman and CEO Bill Styslinger said in announcing the earnings.

Including eventIS for the final five months of the year, SeaChange expects revenue in the second half of the year to be approximately 10% higher than the first half of 2009. Styslinger said the company expects stronger demand for VOD servers and VOD software from North American service providers in the second half to offset "anticipated continued softness" in the advertising-insertion and broadcast product segments.

SeaChange said the eventIS VOD software platform manages and integrates broadcast and VOD metadata, controls the on demand network allocation and manages VOD subscriber information for three-screen delivery. The eventIS acquisition provides "a potential outlet for incremental sales of existing SeaChange products," particularly VOD servers, according to the Acton, Mass.-based company.

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