News summary for 8/03/07

Fri, 08/03/2007 - 9:10am

BigBand shares slump after Q2 earnings call 
By Mike Robuck

BigBand Networks lowered its profit outlook yesterday, setting off a stock slide that continued into Friday morning. BigBand’s shares closed at $13.98 on Thursday, but by late Friday morning they were trading around $10.10.

BigBand has enjoyed early success in the switched digital video sector with deployments by Time Warner Cable and Cablevision. The company also makes cable modem termination systems gear.

While BigBand posted revenues of $54.5 million, which was a 44 percent increase over the second quarter of 2006, its profits fell short of Wall Street’s expectations. The disappointment will stretch into the next quarter; BigBand now expects earnings of 3 cents to 8 cents per share instead of the previous forecast of 6 cents to 11 cents per share.

BigBand anticipates its litigation with Imagine Communications is a factor that could cut into the company’s bottom line. BigBand filed an intellectual property lawsuit against  Imagine, and Imagine has countersued.

ThinkEquity Partners analysts Anton Wahlman and Eric Kainer cited Comcast picking Arris and Harmonic for its edge QAMs instead of BigBand as a factor that could impact whether Comcast uses BigBand’s switched digital solution.

Walhman and Kainer also said that Verizon’s adoption of an all-digital network could impact BigBand because Verizon would buy less equipment from BigBand. Verizon could also sell off its analog equipment on the secondary market, which would also affect BigBand sales.

Secure Signals tackles cable ops’ non-responders
By Traci Patterson

Secure Signals International (SSI), a risk management firm for the cable TV industry, and Genesys Solutions Inc., a system integration and software development company, have teamed up for a digital set-top box non-responder management solution for cable operators.

The solution, SSI Guard Dog, manages the work flow generated by non-responding digital set-tops and helps to identify fraudulent consumer activity, such as attached filters or devices that render digital STBs unresponsive to headend billing systems. If a PPV request comes in, for example, and the request does not reach the billing system, a non-responder report is created.

“There’s not a cable operator out there that knows exactly what’s going on with their non-responders,” said Stan McGinnis, founder and CEO of SSI. And if non-responders account for more than six percent of an operator’s customer base, it’s a problem, McGinnis said.

SSI creates a VPN within the cable company and dumps non-responder reports and other data as frequently as the operator desires. When the data is dumped, it is then offline, and therefore not affecting anything online.

Cable piracy is defined as the unauthorized interception, receipt or assistance in intercepting or receiving services. Fraud, on the other hand, occurs when someone knowingly lies to obtain benefit or advantage, or to cause some benefit that is due to be denied.
“Fraud is possible, and often prevalent, across all network technologies," said Ganesh Hegde, founder and CEO of Genesys. “With telecommunications fraud having tripled over the past six years, emerging service providers and relatively new technologies are particularly vulnerable.”

SSI estimates that about $56 billion is lost each year due to fraud in the telecom industry. Telephony is still a young service in the cable world, and fraudsters tend to migrate to the system that’s least monitored or least experienced.

SSI Guard Dog is currently being beta tested on several U.S. cable systems.
In June, SSI and NeuStar Inc. joined forces for a risk management program. NeuStar’s clearinghouse solution allowed SSI, for the first time, to offer cable operators a broadband loss prevention management solution.

Verimatrix denies patent infringement claim 
By Traci Patterson

In response to Widevine Technologies Inc.’s allegation that Verimatrix’s content security solutions, including VCAS, infringe on Widevine’s 7,165,175 selective encryption patent, Verimatrix said it will respond aggressively to the accusation, both publicly and through the legal process.

“Verimatrix is confident that its products and technologies do not infringe on Widevine’s patents and will vigorously defend itself against Widevine’s unsupported claims,” a company press release stated.

Widevine claimed that Verimatrix has “willfully infringed and continues to willfully infringe Widevine’s patent rights.” Verimatrix has not responded to Widevine’s offer to openly license the patent, Widevine said.

“We’re outperforming Widevine both technically and in the marketplace,” said Tom Munro, Verimatrix’s CEO.

“Our products are used by more operators and more subscribers around the world. Our products have been developed using our own intellectual property portfolio and with key patent rights that we have licensed from several other industry leaders.”

Verimatrix has yet to be formally served with Widevine’s lawsuit. The suit was filed in the U.S. District Court for the Eastern District of Texas.

Airvana’s profit drops in second quarter 
By Mike Robuck

Airvana, a provider of network infrastructure products used by wireless operators to provide mobile broadband services, reported that its second quarter results were lower than the same time frame last year.

Airvana’s total revenue for the second quarter of this year was $156.3 million, compared with a total revenue of $167.3 million in the second quarter of 2006. Total revenue for the first half of 2007 was $156.5 million, while total revenue for the first half of 2006 was $167.5 million.

Airvana said the commercial release of the EV-DO Rev A software product triggered the significant revenue recognition in the second quarter of 2007, while delivery of the EV-DO Rev 0 product triggered the significant revenue recognition in the second quarter of 2006. Net income for the second quarter of 2007 was $86.1 million, compared to a net income of $120.5 million for the same time frame a year ago.

"This was a milestone quarter for Airvana," said Randy Battat, president and chief executive officer, in a prepared statement. "Billings were strong as CDMA operators around the world continued to deploy EV-DO networks. We delivered our most significant release for EV-DO Rev A in April. This new software is being deployed by major wireless operators to provide significantly higher performance broadband services to their customers.”

Ditech set to disappoint with Q1 results
By Brian Santo

Ditech Networks offered a preliminary estimate of first quarter 2008 earnings of $14 million to $14.5 million.

"Our revenue shortfall was due to sharply lower international sales than we expected and lower-than-expected sales with our new U.S. wireless customer," said Tim Montgomery, Ditech's president and CEO. "The results of the current period demonstrate we face difficulties in convincing customers to prioritize the budget and deployment of our solution in their networks. While our first quarter results were disappointing, we remain actively engaged with wireless customers around the world and our confidence in our long-term prospects remains strong."

Ditech did not identify the customer by name. Global Crossing is the most recently-announced U.S. customer Ditech has with wireless operations.

Verso selected for WiMAX deployment in the Dominican Republic
By Panos Loukos, World Markets
Copyright 2007 World Markets Research Limited
All Rights Reserved

U.S.-based provider of next-generation solutions Verso Technologies has been selected by Dominican wireless broadband operator OneMax for the deployment of the former's I-Master Solution for post-paid and pre-paid converged IP billing services over mobile WiMAX. Verso's solution will allow OneMax to authenticate and rate both voice and data services for its subscribers and to enhance distribution and market penetration. It enables providers to create new, long-term revenue streams by deploying a wide spectrum of new products with pre-paid, limited credit, and other specialized billing models.

OneMax is the first commercial operator to offer a wide array of services in the Dominican Republic, including voice over Internet Protocol (VoIP), Internet and multimedia services over mobile WiMAX, and amongst the first to do so in the Latin American region. The deployment of Verso's solution will enable expansion in the market through the provision of new segments, notably pre-paid, and easy access and payment systems for the services, which also translates into reduced costs for the operator.

Broadband Briefs for 8/03/07

* PLP licenses Corning FTTx connector patents
By Brian Santo

Corning Cable Systems has granted Preformed Line Products Company a non-exclusive license to certain optical fiber terminal patents. Corning will also supply PLP with its OptiTap Connectors.

“PLP is pleased to be able to address the growing market demand for preconnectorized optical terminals,” said John Hofstetter, director of marketing and sales for PLP. “PLP’s innovative Coyote Closure designs, coupled with Corning’s OptiTap Connector technology, can advance the use of cost-effective preconnectorized products in FTTx deployments.”

* OpenTV ups revenue, increases net loss in Q2
By Traci Patterson

OpenTV brought in $24.3 million in revenue in Q2, down 8 percent sequentially but up 3 percent year-on-year. The company ended the quarter with a net loss of $4.9 million, compared with $2.5 million in the year-ago quarter.

In June OpenTV introduced its new Rapid Porting Program (RPP) to provide rapid ports of OpenTV middleware to chipsets and set-top boxes.



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