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.
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.