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BigBand heads toward IPOville

Wed, 01/03/2007 - 8:13am
Jeff Baumgartner, CED

BigBand Networks could raise up to $140 million via an initial public offering (IPO).

In a widely-expected move, BigBand filed an S-1 prospectus with the Securities and Exchange Commission on Dec. 22, 2006. In it, the company did not disclose the number of shares or the anticipated pricing. A BigBand spokesman declined further comment beyond the information contained in the filing, citing a requisite "quiet period."

BigBand, which has applied to have its common stock quoted on the NASDAQ under the "BBND" symbol, did disclose an equally requisite raft of details about its business.

Among them, the company said net revenues jumped 59.6 percent to $113.6 million for the nine month period ended Sept. 30, 2006. That nine-month figure also marks increases compared to full-year net revenues posted in 2005 ($97.9 million), 2004 ($35.4 million), and 2003 ($21.5 million).

BigBand also shed light on its recent customer makeup, divulging that sales to its five largest customers accounted for about 73 percent of net revenue for the nine months ended Sept. 30, 2006. Among the top four in that period, Verizon accounted for 27 percent of net revenues, followed by Comcast (14 percent), Cox Communications (13 percent), and Time Warner Cable (12 percent).

BigBand also achieved the important milestone of its first-ever quarter of profitability for the period ended Sept. 30, 2006, posting net income of roughly $1.6 million, versus a net loss of $6.8 million in the year-ago period.

BigBand initially cut its teeth with its core processing platform, the Broadband Multimedia-Service Router (BMR), and the Broadband Multimedia-Service Edge (BME), a hardware component designed to communicate with subscriber set-tops and cable modems from the edge of the service provider's network, handling media processing and switching of video services, including video-on-demand and switched broadcast. BigBand has complemented its hardware with a range of software modules that handle elements such as rate shaping, rate clamping, digital video splicing, video over Ethernet, video encryption, and metadata processing.

The company expanded into the IP data and voice sector in June 2004, when it sewed up the acquisition of the IP cable business unit of ADC, which included the "Cuda" cable modem termination system (CMTS) product line and FastFlow service provisioning system. Although the purchase price was undisclosed at the time, BigBand, in the prospectus filed last month, valued the deal at approximately $25.1 million. These days, BigBand is developing a modular-CMTS, and its primary competition in the CMTS arena includes ARRIS, Cisco Systems and Motorola Inc.

In the prospectus, BigBand said it plans to use the net proceeds from the offering to repay about $14 million in debt, for working capital, capital expenditures and for other general corporate purposes. The company may also tap those funds for acquisitions of complementary businesses, products or technologies.

BigBand listed the following underwriters for the offering: Morgan Stanley; Merrill Lynch; Pierce, Fenner & Smith; Jefferies & Co.; Cowen & Co.; and ThinkEquity Partners LLC.

BigBand was founded in December 1998. It had 507 employees as of Sept. 30, 2006, including 173 in sales, 223 in R&D, 42 in manufacturing operations, and 69 in a general and administrative capacity.

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