SeaChange Sells Off as Quarter Looks Soft

Video on demand supplier SeaChange (SEAC) plunged Tuesday evening after the company posted weaker-than-expected second-quarter results and guided analysts to a soft third quarter as well.

For the second quarter ended July 31, SeaChange lost $635,000, or 2 cents a share, on revenue of $33.3 million. A year ago the company lost $684,000, or 3 cents a share, on revenue of $27 million. Analysts surveyed by Thomson Financial/First Call had predicted a 1-cent loss on revenue of $33 million.

For the third quarter ending in October, the company expects to lose 2 cents on revenue of $33 million.

After dropping 33 cents, to $7.15, during Tuesday afternoon's regular session, the stock slid 60 cents in after-hours action on Nasdaq. At recent levels the stock is more than 80% below its 52-week high. SeaChange shares have traded in the single digits ever since a patent setback with rival nCube this spring.

On the upside, SeaChange will be introducing new server technology in the fourth quarter that should improve margins, according to Yvette Gordon-Kanouff, vice president, Interactive Technologies. Revenue should hold steady at $200 per video stream, a common yardstick of VOD capacity, she says; CEO Bill Styslinger says that a $180-per-residential video stream figure calculated by an analyst for the second fiscal quarter ended July 31 is an "anomaly."

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