BigBand Networks, Inc., (NASDAQ:BBND), a leader in digital video
networking, today reported financial results for the second quarter
ended June 30, 2010.
Revenues for the second quarter of 2010 were $26.4 million,
compared to $39.0 million for the second quarter of 2009. GAAP net
loss for the second quarter of 2010 was $9.6 million, or ($0.14)
per share, compared to GAAP net income of $3.1 million, or $0.04
per diluted share, reported in the second quarter of 2009.
On a non-GAAP basis, the Company reported a net loss of $5.1
million, or ($0.07) per share, in the second quarter of 2010. This
compares to net income of $6.0 million, or $0.09 per diluted
share, reported in the second quarter of 2009. Second quarter 2010
non-GAAP results exclude primarily $3.6 million in stock-based
compensation expense and $1.0 million related to restructuring
charges. Our non-GAAP results for the quarters reflect the
adjustments described in the Reconciliation of GAAP to non-GAAP
Financial Measures attached to this press release.
The Company closed the second quarter of 2010 with $163.1
million in cash and marketable securities.
“During the second quarter, we increased our Switched Digital
Video footprint to more than 37 million households and worked with
customers to advance their IPTV deployments,” commented Amir
Bassan-Eskenazi, President and CEO of BigBand Networks. “I am
encouraged by the progress we have made in our products and
technology. We expect these investments to yield long-term growth
and shareholder value.”
Third Quarter 2010 Business Outlook:
For the third quarter of 2010, management provides the following
outlook:
- Net revenues are expected to be
in the range of $24 million to $27 million.
- GAAP gross margins are expected
to be in the range of 52% to 54%.
- Non-GAAP gross margins are
expected to be in the range of 54% to 56%.
- GAAP operating expenses are
expected to be in the range of $22.0 million to $22.5 million.
- Non-GAAP operating expenses,
excluding stock-based compensation expense, are expected to be in
the range of $19.0 million to $19.5 million.
- GAAP net loss per share is
expected to be in the range of ($0.11) to ($0.14).
- Non-GAAP net loss per share is
expected to be in the range of ($0.06) to ($0.09).
The following table shows our non-GAAP outlook for the quarter
ending September 30, 2010 reconciled to our GAAP outlook.
Estimated Loss per Share Low High GAAP net loss ($0
.11) ($0 .14) Stock-based compensation and related income taxes
0
.05
0
.05
Non-GAAP net loss
($0 .06)
($0 .09)
Non-GAAP Financial Measures
BigBand reports all financial information required in accordance
with U.S. generally accepted accounting principles (GAAP), but we
believe that evaluating our ongoing operating results may be
difficult to understand if limited to reviewing only GAAP financial
measures. Many of our investors have requested that we disclose
non-GAAP information because it is useful in understanding our
performance as it excludes non-cash and other one-time charges or
benefits that many investors feel may obscure our true operating
results. Likewise, management uses non-GAAP measures to manage and
assess the profitability of our business going forward and does not
consider stock-based compensation expense and related taxes, or
restructuring charges in managing our operations. Specifically,
management does not consider these expenses/benefits when
developing and monitoring our budgets and spending. The economic
substance behind our decision to exclude stock-based compensation
relates to these charges being non-cash in nature. We exclude
restructuring charges, as they are one-time events. As a result, we
use calculations of non-GAAP operating income, net income, net
income per share and gross margin, which exclude these expenses
when evaluating our ongoing operations and allocating resources
within the organization.
As a result, our management believes it is useful for itself and
investors to review both GAAP information that includes such
charges and non-GAAP financial measures that exclude these charges
because management believes such information enables readers of
these financial results to have a better understanding of the
overall performance of our ongoing business operations in the
periods presented.
Whenever we use a non-GAAP financial measure, we provide a
reconciliation of the non-GAAP financial measure to the most
closely applicable GAAP financial measure. Investors are encouraged
to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measure.
Conference Call Details for August 4, 2010
BigBand Networks will host a corresponding conference call and
live webcast at 2:00 p.m. Pacific Time today. To access the
conference call, dial +1-888-549-7704 for the U.S. or Canada and
+1-480-629-9857 for international callers. The webcast will be
available live on the Investor Relations section of the Company’s
corporate website, and via replay beginning approximately two hours
after the completion of the call until the Company’s announcement
of its financial results for the next quarter. An audio replay of
the call will also be available to investors beginning at
approximately 4:00 p.m. Pacific Time on August 4, 2010 until 11:59
p.m. Pacific Time on August 11, 2010, by dialing +1-800-406-7325 or
+1-303-590-3030 for callers outside the U.S. and Canada, and
entering passcode 4329716#.
Cautionary Statement
The statements in this release regarding our progress on newer
products, the impact of these newer products on our future growth
and shareholder value, and our GAAP and non-GAAP business outlook,
as applicable, with respect to the quarter ending September 30,
2010 (including revenues, gross margins, operating expenses and
loss per share) are forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These statements involve risks and uncertainties that
could cause our actual results to differ materially, including, but
not limited to: changes in demand for video services, the market
acceptance of our products; our ability to develop our new products
on a timely basis; the financial strengths of our current and
potential customers; the fluctuations in our gross margins; the
concentration of our customer base; competitive developments
including pricing pressures; the timing of recognition of a
significant portion of our net revenues given the complex systems
integration involved; our ability to manage operating expenses
effectively; the level of orders that are received and can be
shipped in a given quarter; and the general economic, industry or
political conditions in the United States or internationally.
For a detailed discussion of these and other risk factors,
please refer to BigBand's Report on Form 10-K for fiscal year 2009.
You can obtain copies of the reports on the SEC's Web site
(http://www.sec.gov).
Stockholders of BigBand Networks are cautioned not to place
undue reliance on our forward-looking statements, which speak only
as of the date such statements are made. BigBand Networks does not
undertake any obligation to publicly update any forward-looking
statements to reflect events, circumstances or new information
after this August 4, 2010 press release, or to reflect the
occurrence of unanticipated events.
About BigBand Networks
BigBand Networks, Inc. (NASDAQ: BBND) provides service providers
with innovative network solutions designed to make it easier to
move, manage and monetize video. These solutions are based on
BigBand's video-networking platforms that are built to enable
efficient and reliable delivery across a wide range of services,
including digital TV, high definition TV, advanced advertising,
video-on-demand and interactive TV. BigBand Networks' has done
business with more than 200 service providers -- including seven of
the ten largest service providers in the U.S. -- and leading cable
and telco service providers in North America, Asia and Europe.
BigBand Networks is based in Redwood City, Calif., with offices
worldwide. For additional information about the company, please
call +1.650.995.5000, email info@bigbandnet.com or visit
www.bigbandnet.com.
BigBand Networks' brand and product names are service marks,
trademarks or registered trademarks of BigBand Networks, Inc. in
the United States and other countries. All other marks are the
property of their respective owners.
BigBand Networks, Inc.
Condensed Consolidated Balance Sheets (In thousands, Unaudited)
As of June 30, As of December
31, 2010 2009
ASSETS Current assets: Cash and cash equivalents $ 33,058 $
24,894 Marketable securities 130,035 147,014
Total cash, cash equivalents and marketable securities
163,093 171,908 Accounts receivable, net 6,644 18,495 Inventories,
net 7,703 4,933 Prepaid expenses and other current assets
4,759 6,177 Total current assets 182,199
201,513 Property and equipment, net 9,911 11,417 Goodwill
1,656 1,656 Other non-current assets 8,923
9,002 Total assets $ 202,689 $ 223,588
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 4,187 $ 9,483 Accrued compensation and related
benefits 5,459 5,023 Current portion of deferred revenues, net
30,582 32,428 Current portion of other liabilities 5,119
7,083 Total current liabilities 45,347 54,017
Deferred revenues, net, less current portion 10,434 12,438
Other liabilities, less current portion 1,978 2,642 Accrued
long-term Israeli severance pay 4,663 4,215 Stockholders’
equity: Common stock 69 67 Additional paid-in-capital 292,429
283,704 Accumulated other comprehensive (loss) income (202 ) 124
Accumulated deficit (152,029 ) (133,619 ) Total
stockholders’ equity 140,267 150,276
Total liabilities and stockholders’ equity $ 202,689 $
223,588
BigBand Networks, Inc. Condensed Consolidated
Statements of Operations (In thousands, except per share amounts,
Unaudited)
Three Months Ended June
30, Six Months Ended June 30, 2010
2009 2010 2009
Net revenues: Products $ 16,605 $ 22,221 $ 41,486 $
56,148 Services 9,788 16,805 17,142
26,766 Total net revenues 26,393 39,026 58,628
82,914 Cost of net revenues: Products 9,402 10,918 23,326
25,982 Services 3,032 3,113 6,309
6,284 Total cost of net revenues 12,434
14,031 29,635 32,266
Gross profit 13,959 24,995 28,993
50,648 Operating expenses: Research and
development 13,110 11,127 26,602 22,610 Sales and marketing 5,998
5,855 12,048 12,304 General and administrative 4,010 4,962 8,536
9,497 Restructuring charges 1,039 - 1,039 1,356 Class action
litigation charges - 477 -
477 Total operating expenses 24,157
22,421 48,225 46,244
Operating (loss) income (10,198 ) 2,574 (19,232 ) 4,404 Interest
income 337 690 852 1,593 Other (expense) income, net (95 )
130 (183 ) (93 ) (Loss) income before (benefit
from) provision for income taxes (9,956 ) 3,394 (18,563 ) 5,904
(Benefit from) provision for income taxes (315 ) 319
(153 ) 547 Net (loss) income $ (9,641 ) $
3,075 $ (18,410 ) $ 5,357 Basic net (loss) income per
common share $ (0.14 ) $ 0.05 $ (0.27 ) $ 0.08 Diluted net
(loss) income per common share $ (0.14 ) $ 0.04 $ (0.27 ) $ 0.08
Shares used in GAAP basic net (loss) income per
common share 68,018 65,753 67,667
65,309 Shares used in GAAP diluted net (loss)
income per common share 68,018 68,771
67,667 68,519
BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (In
thousands, except per share amounts, Unaudited)
Three Months Ended June 30, 2010 GAAP
Results
Stock-basedCompensationand Income Taxes
Restructuring
charges
Non-GAAPResults
Net revenues: Products $ 16,605 $ - $ - $ 16,605
Services 9,788 - -
9,788 Total net revenues 26,393 -
- 26,393 Cost of net
revenues: Products 9,402 (355 ) - 9,047 Services 3,032
(255 ) - 2,777 Total cost
of net revenues 12,434 (610 ) -
11,824 Gross profit 13,959 610
- 14,569 Operating
expenses: Research and development 13,110 (1,365 ) - 11,745 Sales
and marketing 5,998 (642 ) - 5,356 General and administrative 4,010
(1,008 ) - 3,002 Restructuring charges 1,039 -
(1,039 ) - Total operating expenses
24,157 (3,015 ) (1,039 ) 20,103
Operating loss (10,198 ) 3,625 1,039 (5,534 )
Interest income 337 - - 337 Other expense (95 ) -
- (95 ) Loss before benefit from income
taxes (9,956 ) 3,625 1,039 (5,292 ) Benefit from income taxes
(315 ) 104 - (211 ) Net
loss $ (9,641 ) $ 3,521 $ 1,039 $ (5,081 )
Basic net loss per common share $ (0.14 ) $ (0.07 ) Diluted net
loss per common share $ (0.14 ) $ (0.07 ) Shares used in
basic net loss per common share 68,018 68,018
Shares used in diluted net loss per common share
68,018 68,018
BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (In
thousands, except per share amounts, Unaudited)
Six Months Ended June 30, 2010 GAAP
Results
Stock-basedCompensation
Restructuringcharges
Non-GAAPResults
Net revenues: Products $ 41,486 $ - $ - $ 41,486
Services 17,142 - -
17,142 Total net revenues 58,628
- - 58,628 Cost of net
revenues: Products 23,326 (684 ) - 22,642 Services 6,309
(492 ) - 5,817 Total cost
of net revenues 29,635 (1,176 ) -
28,459 Gross profit 28,993
1,176 - 30,169
Operating expenses: Research and development 26,602 (2,687 ) -
23,915 Sales and marketing 12,048 (1,311 ) - 10,737 General and
administrative 8,536 (2,209 ) - 6,327 Restructuring charges
1,039 - (1,039 ) - Total
operating expenses 48,225 (6,207 )
(1,039 ) 40,979 Operating loss (19,232 ) 7,383
1,039 (10,810 ) Interest income 852 - - 852 Other expense
(183 ) - - (183 ) Loss before
benefit from income taxes (18,563 ) 7,383 1,039 (10,141 ) Benefit
from income taxes (153 ) 125 -
(28 ) Net loss $ (18,410 ) $ 7,258 $ 1,039 $
(10,113 ) Basic net loss per common share $ (0.27 ) $ (0.15
) Diluted net loss per common share $ (0.27 ) $ (0.15 )
Shares used in basic net loss per common share 67,667
67,667 Shares used in diluted net loss per common
share 67,667 67,667
BigBand
Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial
Measures (In thousands, except per share amounts and percentages,
Unaudited)
Three Months Ended June
30, Six Months Ended June 30, 2010
2009 2010
2009 GAAP and Non-GAAP net revenues as
reported $ 26,393 $ 39,026 $ 58,628 $ 82,914
GAAP cost of net revenues as reported $ 12,434 $
14,031 $ 29,635 $ 32,266 Inventory recovery relating to CMTS
platform - 43 - 73 Stock-based compensation expense (610 )
(520 ) (1,176 ) (959 ) Non-GAAP cost of net
revenues $ 11,824 $ 13,554 $ 28,459 $ 31,380
GAAP gross profit as reported $ 13,959 $ 24,995 $
28,993 $ 50,648 Inventory recovery relating to CMTS platform - (43
) - (73 ) Stock-based compensation expense 610
520 1,176 959 Non-GAAP gross
profit $ 14,569 $ 25,472 $ 30,169 $ 51,534
As a percentage of net revenues: GAAP gross profit as
reported 52.9 % 64.0 % 49.5 % 61.1 %
Non-GAAP gross profit 55.2 % 65.3 % 51.5 %
62.2 % GAAP operating (loss) income as reported $
(10,198 ) $ 2,574 $ (19,232 ) $ 4,404 Inventory recovery relating
to CMTS platform - (43 ) - (73 ) Stock-based compensation expense:
- Cost of net revenues 610 520 1,176 959 - Research and development
1,365 1,191 2,687 2,220 - Sales and marketing 642 580 1,311 1,064 -
General and administrative 1,008 1,188 2,209 2,250 Restructuring
charges 1,039 - 1,039 1,356 Class action litigation charges
- 477 - 477
Non-GAAP operating (loss) income $ (5,534 ) $ 6,487 $
(10,810 ) $ 12,657 GAAP net (loss) income as reported
$ (9,641 ) $ 3,075 $ (18,410 ) $ 5,357 Inventory recovery relating
to CMTS platform - (43 ) - (73 ) Stock-based compensation expense
3,625 3,479 7,383 6,493 Restructuring charges 1,039 - 1,039 1,356
Class action litigation charges - 477 - 477 Tax adjustments
(104 ) (961 ) (125 ) (1,466 ) Non-GAAP net
(loss) income $ (5,081 ) $ 6,027 $ (10,113 ) $ 12,144
Basic Non-GAAP net (loss) income per common share $ (0.07 )
$ 0.09 $ (0.15 ) $ 0.19 Diluted Non-GAAP net (loss)
income per common share $ (0.07 ) $ 0.09 $ (0.15 ) $ 0.18
Shares used in Basic Non-GAAP net (loss) income per
common share 68,018 65,753
67,667 65,309 Shares used in Diluted
Non-GAAP net (loss) income per common share 68,018
68,771 67,667 68,519
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