BigBand Networks yesterday handed out a big dose of bitter medicine in one long draught: a third quarter loss, getting out of the CMTS business, a 15 percent reduction of its workforce, and a re-organization. There was a big spoonful of mitigating sugar, however; the company announced that Comcast has become a customer of its switched digital video products.
BigBand bought the Cuda line from ADC in May of 2004, considering the CMTS line a good complement for its service routing products. BigBand expected that innovations in modular CMTS technology would increase the appeal of the Cuda line, but was disappointed on that score.
The line never gained much in the way of market share. BigBand could no longer afford to invest R&D money in what had become a low-margin, commodity business, said BigBand President and CEO Amir Bassan-Eskenazi.
The company will continue to support its installed base through 2010.
Bassan-Eskenazi said the company would reassign many of the employees with IP and DOCSIS expertise who were working on the Cuda line to the design of new products that will provide video-over-IP. He declined to elaborate.
The company now has a headcount of 630. It said it will lay off 15 percent of its employees, and will spread the cuts across the entire company.
As part of the restructuring, David Heard was promoted to chief operating officer. Heard was previously GM of product operations. Heard joined BigBand earlier this year. He had worked at a number of companies, including Tekelec, Lucent, AT&T and Somera Communications. He assumes responsibility for R&D, marketing, sales, services and operations.
The company will focus on its routing products and edge QAMs, where it has been finding much more success, especially in switched digital video (SDV) and telco TV. The company supplies Verizon with products for its FiOS service, and Bassan-Eskenazi said during the third quarter the company added two more cable operators as customers for its SDV products, one of which was Comcast. So far, BigBand is designated as Comcast’s sole source for SDV managers.
But for all the success with signing up customers, there have been delays with installations, which has slowed the collection of revenues, in part leading to lower Q3 results.
Revenues for the third quarter of 2007 were $38.5 million, a decrease of 10 percent from the third quarter of 2006. The company lost $12.2 million, compared to a profit of $1.6 million in Q3 ‘06. BigBand took $5.8 million in fixed assets and inventory charges associated with the retirement of the Cuda CMTS.
“While our current operating challenges will take some time to work through, we expect to emerge from the next few quarters as a stronger, more focused company,” said Bassan-Eskenazi. “We believe that switched digital video, edge QAM and telco TV offer BigBand a significant opportunity for growth over the coming years and that addressable advertising and IPTV will create additional opportunities.”