SeaChange promotes Kanouff to president, announces layoffs
During its fourth-quarter and year-end earnings call yesterday, SeaChange International announced that Yvette Kanouff was promoted to president, and that president and COO Ed Dunbar was leaving the company, as well as the layoffs of an unannounced number of employees.
Kanouff, who was formerly chief strategy officer, will be responsible for SeaChange’s business development, overall product strategy, product management, and communications and investor relations.
In addition to Kanouff’s promotion, SeaChange also announced that Erwin van Dommelen was promoted to president of SeaChange Software. Van Dommelen, who came to SeaChange via its acquisition of eventIS Group late last year, will be responsible for SeaChange’s Software business, which SeaChange CEO Bill Styslinger, in a letter to shareholders, said would be a growth area for the company going forward. In his new role, van Dommelen will be the general manager of the Software business unit, which includes growth, profit, engineering, product roadmaps and direction.
Dunbar joined SeaChange in April of last year after coming over from Comcast. Dunbar was an area vice president at Comcast and general manager of Comcast’s Atlanta region. Prior to 2007, he spent five years as vice president at Comcast Spotlight.
“I would like to note that Ed has been a great colleague and friend over the years, and I appreciate his time and contributions to SeaChange,” Styslinger said. “We all wish him well in his future endeavors.
“We also look forward to working with Yvette Kanouff and Erwin van Dommelen in their new roles. They have gained much respect in the industry in their prior roles, and we’re confident that they will continue that trend in their new positions.”
SeaChange didn’t give a reason for Dunbar’s departure. His last day will be Monday, and he will continue to receive his base salary, roughly $483,750 according to the Boston Business Journal, through April 13, 2011. SeaChange also agreed to accelerate the vesting period of options to acquire 60,000 shares of common stock through March 15 of next year.
Styslinger said that in addition to the increased focus on software, SeaChange will also work on lowering its R&D expenses, growth readiness and over-the-top products.
“We are at the point where our software business can stand on its own and produce a good profit,” Styslinger wrote in a letter to shareholders. “We will take advantage of synergies with our recent acquisitions, reviewing strategically our products, utilizing our offshore facilities and making use of a broad development strategy of reusable components to reduce various costs over time, and in particular the percent of R&D in software.
“We see over-the-top software as a major opportunity for us. We’ve won several over-the-top software customers, and with the recent news about Viacom pulling out of Hulu, we see further opportunity for our customers to lead in the over-the-top space. We also see significant interest in customers offering services out of network, which our software supports for both linear and on-demand programming. We continue active discussions with various operators in relation to our over-the top-solution.”
Avondale Partners senior analyst Blair King wrote that reducing the headcount didn’t necessarily mean a huge savings for SeaChange due to the January acquisition of VividLogic.
“In the near term, we continue to see higher opex, with the addition of VividLogic employees partially offsetting the company's recent headcount reductions and shifting the benefits of an improving top line into out quarters,” King said. “Nevertheless, we are encouraged by SeaChange's efforts to align R&D resources around a common platform, uniquely tailored to geographic product requirements. Ultimately, this initiative should pay dividends for shareholders as integration efforts take hold and VOD activity outside North America accelerates.”
SeaChange’s R&D expenses are roughly 30 percent of revenue, but the company is targeting 26 percent in the current fiscal year and 22 percent in 2012.
SeaChange reported a net income of $44,000, or breakeven per share, for the fourth quarter, which was lower than $4.8 million in the prior-year quarter.
Excluding items, adjusted net income for the quarter decreased to $2.31 million, or $0.07 per share, from $5.81 million, or $0.19 per share, in the year-ago quarter.
Total revenues for the quarter were down to $53 million from $53.95 million in the same quarter last year; Avondale Partners’ King had estimated $53.6 million.
Total revenues from the company’s software segment in the fourth quarter of fiscal 2010 were $34.9 million, which were $2.9 million, or 9 percent, higher than the revenue of $32 million generated in last year’s fourth quarter. SeaChange said the increase in software revenues between years was due primarily to increased VOD software subscription revenues from Comcast and Cox and the addition of revenue in this year’s fourth quarter from eventIS.
The servers and storage segment generated revenue of $12.3 million in the fourth quarter of fiscal 2010, which was $5.4 million lower than revenues of $17.7 million for the fourth quarter of fiscal 2009. SeaChange said the decrease in servers and storage revenue from an “unusually strong fourth quarter” of 2009 was due to lower VOD server shipments to smaller North American cable television customers.
For fiscal 2010, SeaChange reported net income of $1.32 million, down from the $9.97 million it posted a year ago. Total revenue for fiscal 2010 was $201.7 million, which was down from $201.8 million from the previous fiscal year.
For fiscal 2011, the company continues to project revenues in the range of $225 million to $235 million.