appointed two cable tech honchos to top jobs as the networking gearmaker hopes to cash in on an infrastructure expansion boom.
Wayne Davis was named CEO and Jim Chiddix will serve as vice chairman of Norcross, Ga.-based Vyyo. Davis has headed engineering efforts for cable giants
and, more recently,
. Until this month, Chiddix was president of
, a video software developer. Previously, he was technology chief for
Time Warner Cable
Vyyo makes a product called UltraBand that boosts the bandwidth available on wire running from cable distribution nodes to homes or offices. The so-called overlay technology works with existing cable systems and set-top boxes and is seen as an incremental, cost-effective way to upgrade networks to handle higher traffic demands.
Investors flocked to the stock last week after Janco Partners analyst Cameron Cooke initiated coverage Tuesday with a bullish appraisal of the company's upgrade technology and a $15 price target. Shares surged 61% for the week, coming within pennies of a one-year high at $8.30 Thursday before pulling back to close Friday at $7.16.
Facing an onslaught of competition from satellite TV companies on high-definition video and from telcos such as
on triple-play video, Net and phone offerings, the cable companies are once again in expansion mode.
Last month, for example, Comcast boosted its 2007 spending plan by $1.1 billion, or 24%, to $5.7 billion. The Philly cable shop said about $900 million of that increase will go efforts such as network capacity expansion.
Observers say there is obviously a lot of money being divvied up for plant upgrades, but there's no guarantee Vyyo will be a major beneficiary of the spending splurge. Fans, however, see the quick, cheap overlay as an attractive option for cable companies in a bind. They note that nearly any new contracts that come Vyyo's way would have a huge impact on the company.
On a pro forma basis, Vyyo is estimated to have lost about $23 million last year on sales of $9 million. Looking ahead, analysts expect losses to narrow this year to about $17 million, or $1.02 a share, on $43 million in sales.
In an interview, both Davis and Chaddix said the immediate opportunity for Vyyo was helping cable companies deliver bigger network capacities to businesses. "Businesses need the bandwidth," says Davis.
The executives said the company has its gear in trials "in most of the large" cable companies. But the new duo said they don't expect big deployments of their UltraBand gear to the consumer market until after the cable companies start to answer the capacity demands for businesses.
The company has attracted some skeptics. The bearish case against Vyyo is that it depends on largely on one product, and while that product fits a growing need, cable companies are often reluctant to depend on one vendor for supplies.
Davis says licensing its technology to other vendors could help ease those "sole source" concerns.
Though the recent run-up in the stock may have chased off the pessimists, the company has a sizable short following. About 8% of the company's outstanding shares are shorted, meaning there are a few people who have bet that the stock will go down.
The company also has big backers. Chairman Davidi Gilo is the largest stakeholder, with 28% of the stock. And
has taken an interest, holding about 14% of the company.