After ousting former CEO Jay Samit, multiscreen video specialist SeaChange International is now looking to forge a new trail forward under a new CEO, Edward Terino, who spent a good chunk of yesterday’s earnings call explaining how the company intends to get the company back on track.
SeaChange, the subject of M&A rumors in recent years, clearly has some work to do in order to regain the confidence of investors. In the wake of Thursday’s CEO change alongside a disappointing, wider Q4 loss, shares in the company dove 31.12% ($1.73) to $3.83 each in mid-day trading Friday.
Update: SeaChange shares closed down 31.29% ($1.74) Friday, to $3.82 each. SeaChange also revealed more about Samit’s separation agreement in an 8-K filing. Per a pre-existing obligation if Samit was terminated without cause, SeaChange will pay $750,000 via 12 equal monthly installments of $62,500, and pay Samit $625,000 to satisfy his fiscal 2016 and 2017 annual bonuses, as well as pro-rated vesting of some previously restricted stock unit awards. Samit is also under a one-year non-compete.
Terino, who joined SeaChange as COO last year, said he has been spending time with SeaChange’s customers to get a better fix on their current requirements and how SeaChange can better serve and support their future needs.
“Clearly, our number one challenge is execution,” he said, later pointing to the company’s core competency in video backoffice systems, content management and advanced advertising products, and a plan to improve the company’s marketing and sales efforts, including a new inside sales team to drive lead generation and a sales team that will be dedicated on OTT opportunities.
Earlier in the call, SeaChange board chairman Steve Craddock said SeaChange is looking to strengthen itself as a software company while “transitioning its core products to operate in a cloud environment.”
The board, Craddock said, is confident that Terino is the “ideal person to drive SeaChange’s strategic initiative and growth plans at this time,” citing his experience with software and technology companies and, as a long-time member of the SeaChange board, familiarity with SeaChange’s business, strategy and industry.
Terino hinted that SeaChange has some new products in the queue, but didn’t shed much detail other than to say that one of them will be revealed in June.
Terino also was clear that SeaChange will continue to pursue OTT strategies using its new Rave platform.
“We have well over a dozen OTT opportunities and we’re going to continue to pursue that market…We think that market has great potential,” he said, noting that OTT will factor into SeaChange’s growth plan for fiscal 2017.
Meanwhile, some analysts on the call expressed frustration about the future prospects of Nucleus, SeaChange’s software platform for set-tops and gateways (including products that use the Reference Design Kit), noting that SeaChange hasn’t had much success with it outside of Liberty Global. Some were also concerned that Comcast was using that technology for an X1 licensing initiative that has netted wins with Cox Communications and Shaw Communications.
Terino said the opportunities with Nucleus remain strong, despite losing an exec recently who had been leading that business (he didn’t name the exec, but Shiva Patibanda, who had been leading Nucleus, left SeaChange last year and recently resurfaced at Ericsson), but noted that another company in Europe could begin field testing in the next 30 days ahead of a hoped-for commercial deployment.
But Terino also allowed that there might have t be a “misunderstanding” regarding the level of license revenue that SeaChange can get drive from Nucleus. “I don’t believe the Nucleus is going to be a huge license revenue generator for us,” he said, adding later that the revenue model for Nucleus “is predominantly a non-recurring engineering model.”
“There are other big opportunities” for Nucleus,” Terino stressed. “We have [a] fairly significant in home opportunity with an Asia-Pac operator and we also are looking to other ways to try to leverage our capabilities with Nucleus.”
SeaChange was also asked about its strategy and opportunity for Adrenalin, its multiscreen backoffice platform.
Adrenalin, Terino said, will be made to support customers via private (on-premises) and public cloud infrastructures. “We want our customers to have a choice,” he said, adding that some customers can’t afford an on-premises installation of Adrenalin, so a public cloud version could provide a more suitable option.