Skip to main content

BigBand Networks -- the company just got smaller

Last month we wrote about BigBand Networks pre-announcement in which they warned that revenues would be in the range of $35 to $39M, significantly lower than the initially projected $54 to $58M.

This week the actual third quarter results were announced. Revenues were at the high end of the lowered range, coming in at $38.6M, 11% lower than the previous quarter's revenue and beating analyst estimates.

As expected, the company was in the red, showing a loss of $12.2M versus a profit of $1.6M in the previous quarter.

The bad news doesn't stop there. The company also expects to post another loss in the fourth quarter on revenue that is projected to be even lower than the current quarter.

In light of this dismal performance, BigBand has said it is cutting 15% of staff and is discontinuing its Cuda CMTS broadband Internet access product. This will, of course, result in asset and inventory charges as the product line is shut down, further depressing fourth quarter results.

Is there light at the end of the tunnel? Management expects BigBand to regain profitability by becoming a leaner company and by focusing on its digital video segment. It seems this is where the action is as it has received wins in this segment from a number of large customers lately. The company was just selected by ComCast. In August, it was Cox Communications. In June, Korean cable company Keumkang Cable Networks. In March, six Chinese cable companies came on board. They are a supplier to Verizon and the FiOS program and Verizon's recent quarterly results indicate that FiOS is gaining traction among their customers.

The company does have some positives going for it. They have been building their business for eight years; ie, they are not a flash in the pan start-up. Their customer base might be too concentrated but those large cable companies do have deep pockets and the industry is moving in a direction that should benefit BigBand if BigBand can manage to stay in the game.

A wild card in all this is that Time Warner Cable is both a customer and a shareholder in BigBand. Time Warner received stock in exchange for taking a chance on BigBand in the company's early days. It would be in Time Warner's interest to make sure that BigBand survives and prospers.

So it appears there might still be hope for BigBand Networks but reading into management's comments, it could be several quarters before the company begins to truly turn around.

Disclosure:
author still owns a few forlorn shares of BBND

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…