BigBand Networks, Inc., (BBND)

Q2 2010 Earnings Call

August 4, 2010 5:00 PM EST


Erica Abrams – Co-Founder and Managing Director, The Blueshirt Group

Amir Bassan-Eskenazi – CEO

Ravi Narula – CFO


Vivek Arya – Bank of America Merrill Lynch

Blair King – Avondale Partners

George Notter – Jefferies & Company

Greg Mesniaeff – Needham & Company

Victor Chiu – Morgan Keegan



Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the BigBand Networks second quarter 2010 conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions).

This conference is being recorded today, Wednesday, August 4 th of 2010.

Now, I’ll turn the conference over to Erica Abrams. Please go ahead, ma’am.

Erica Abrams

Thank you, operator, and welcome, everyone. If you’ve not seen our earnings press release, it can be found on the Investor Relations section of our website at

Joining me on the call today are Amir Bassan-Eskenazi, CEO; and Ravi Narula, CFO of BigBand Networks. We will discuss the financial results for the second quarter ended June 30 th, 2010 as well as outline the company’s outlook for the third quarter of 2010.

Before I turn the call over to Amir, let me remind you that the matters we will discuss today may include projections and other forward-looking statements and as such are subject to the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, including those risks and uncertainties discussed in our report on Form 10-Q for the quarter ended March 31 st, 2010.

Now, I will turn the call over to Amir. Please go ahead.

Amir Bassan-Eskenazi

Hello and thank you all for joining us today, as we report our second quarter of 2010 results.

As you know from our press release, revenues for the quarter were $26.4 million and our non-GAAP loss was $0.07 per share. Revenues and EPS were within the range of our outlook we provided last quarter. Gross margins were better than expected and the result was a stronger mix of software sales.

During the second quarter, we continued to invest in our product and technology, while maintaining a strong balance sheet. BigBand Network’s broadcast, SDV, and IPTV solutions provided a bandwidth management and advanced media processing that our customers are investing to expand their current capacity for HD and evolve their network to more personalized television. We believe these are critical elements for the core customers and are working closely with them to ensure that our roadmap aligns with their requirements.

Turning to our broadcast business, revenues in the second quarter for the cable and Telco in that segment were relatively flat when compared to revenues in the first quarter in 2010.

In our SDV and QAM business, we experienced a slowdown in revenues as we discussed with you last quarter as some customers are preparing for capacity expansion and others are taking a breather on deploying new systems. We believe this is a temporary situation, but it impacts our Q3 outlook.

We’re excited about the opportunity in front of us in SDV in terms of footprint expansion into new systems and new customers, capacity expansion, supporting HD growth, as well as functional expansion with new IPTV applications. We believe we’ll remain the clear leader in SDV and have now reached over 37 million household pass, deployed or in the process of being deployed.

In the quarter, we announced our deployment with new customers, SureWest Communications, and expanded our footprint with existing customers such as Charter Communications.

SureWest is a leading integrated communication provider that shows BigBand SDV for bandwidth management as it expands its HD availability. A key differentiator was BigBand proven expertise in SDV and show a stability to leverage its investment to deliver IPTV in the future.

Charter Communication, the fourth largest cable operator also selected BigBand SDV in the quarter for footprint rollout to new systems. Charter is using BigBand SDV in both Cisco and Motorola set-top box system to expand capacity for HD programming and faster Internet speeds. Charter is in the process of launching SDV in approximately 60% of its market by the end of 2010. We’re proud to be working with them to achieve this important goal.

Turning to our QAM product, we made progress to diversifying QAM revenues with international wins. We continue to maintain a leading position having shipped over 820,000 channels up from 750,000 channels in the prior quarter to over 60 service providers and customers worldwide.

We believe BigBand’s QAM platform provide the best mix of performance, reliability, and cost with the unique pass to next-generation applications. As cable operators migrate more of their services to HD and personal television, we expect this segment to see increased growth.

In our IPTV solutions, we continue to experience strong interest from prospect and customers. We made significant progress with our IPTV product in the quarter on product development and ecosystem integration. We expect to be successful in helping customers meet their growing demand to deliver video to multiple devices.

At the recent NCTA Cable Show, we demonstrated our vIP PASS solution, a real-world IPTV application in which we connected live video programming to a host of devices, including PC, Apple iPod, and Sony PlayStation, and received a very positive customer response.

In the second quarter, we won our first North American deployment of vIP PASS with Buckeye Cable Systems, an innovative, independent operator. Buckeye chose BigBand vIP PASS to extend its BigBand SDV infrastructure and scale to IPTV quickly and cost effectively. Buckeye is the second customer that we have announced for vIP PASS, following our previous success with LG Telecom in Asia.

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