MSOs are feeling the pressure to expand their networks to meet customer demand. MSOs increasing capital expenditures helped Vecima Networks to a sequential revenue increase of 38 percent – from $20.5 million in its previous quarter, its fiscal fourth quarter, to $28.4 million in its fiscal 2010 first quarter just completed.
“This is an indication of the initial stages of recovery and is in line with a general strengthening of forecasts,” said Dr. Surinder Kumar, chairman and CEO of Vecima. "Gross margin also began to recover, increasing to 36 percent in the first quarter of fiscal 2010, two percentage points higher than Q4 fiscal 2009.”
Net income was $1.2 million, compared with $7.8 million in Q1 last year, a disparity the company attributed to the decrease in sales during intervening quarters.
The company’s fortunes are buoyed in part by the delivery of its new TerraceA multiunit digital transport adaptor (M-DTA) to a major U.S. MSO, which Vecima has not identified. Currently, 15 North American MSOs are evaluating the product, and Vecima expects to launch 10 more evaluation trials in the next few months.
The company also said it has made rapid progress on the development of TerraceQAM, a follow-on product to the TerraceA. The new product will deliver encrypted digital HD and SD television directly to newer flat-panel digital television units. The TerraceQAM is being developed under contract with a leading U.S.-based MSO and will be submitted for certification testing in the near term.