BigBand exceeds Q1 expectations, cuts 25 employees
Switched digital video (SDV) pioneer BigBand Networks reported better-than-expected revenues during yesterday’s first-quarter earnings report, but the company also announced that it was trimming its workforce.
BigBand finished the recent quarter with 496 employees, which was down from the 518 it had at the end of last year and the 603 who were employed during the third quarter of 2007.
BigBand CFO Maurice Castonguay said the cuts were partially due to the company’s decision last year to discontinue its cable modem termination system (CMTS) line, as well as an effort to refocus BigBand’s efforts on SDV.
BigBand will take a charge of $400,000 for employee severance and an $800,000 charge for facility-related expenses.
BigBand had forecast first-quarter revenues to be in the range of $35 million to $39 million, but BigBand CEO Amir Bassan-Eskenazi said that the company’s first-quarter revenues were $39.9 million, which were up from $30.7 million in the fourth quarter of 2007 but down from the $52.8 million in the same quarter a year ago.
BigBand’s increased revenues were due to higher gross margins from orders with software, as well as higher margins on SDV expansion orders. BigBand’s video revenues were up 50 percent compared with the previous quarter.
Bassan-Eskenazi pointed to the increase in high-definition (HD) channels as one of the reasons for the expanded SDV profits, citing Cablevision’s addition of 15 HD channels as one example.
Currently, BigBand’s SDV technology has been deployed in cable systems passing 14 million homes, which is up from the 12 million homes passed in the previous quarter. Bassan-Eskenazi said BigBand is working on expanding its SDV footprint going forward, but the company also benefited in the first quarter from winning back previous markets that had been lost to its competition.
SDV has been around since 2004, when the first trial took place in Austin with BigBand Networks and Time Warner Cable (TWC). SDV sends just the programming that people in a service group or node are watching, instead of the entire slate of channels, which frees up capacity for more HD channels or new advanced services.
In addition to TWC and Cablevision, BigBand counts Cox Communications, Charter Communications and Verizon among its customer base. Bassan-Eskenazi said that while the company expects Verizon to continue to be a significant customer going forward, its contributions to the company’s coffers won’t be as big as they were in late 2006 and early 2007.
BigBand’s net loss for the first quarter was $1.9 million, or 3 cents per share, compared with a net loss of $13.8 million, or 23 cents per share, in the fourth quarter of 2007 and a net loss of $1 million, or 5 cents per share, reported in the first quarter of 2007.
For the second quarter, BigBand said that revenues would be in the range of $40 million to $45 million.
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