BBND Bigband Networks (MM)

BigBand Networks, Inc. (NASDAQ: BBND), a leader in digital video networking, today reported financial results for the fourth quarter and fiscal year ended December 31, 2010.

For the fourth quarter of 2010, total revenues were $26.3 million. This compares to revenues of $34.4 million reported in the fourth quarter of 2009. GAAP net loss for the fourth quarter of 2010 was $5.9 million, or ($0.09) per share, compared to GAAP net loss of $1.2 million, or ($0.02) per share, reported in the fourth quarter of 2009.

On a non-GAAP basis, the Company reported a net loss of $3.4 million, or ($0.05) per share, in the fourth quarter of 2010, which compares to non-GAAP net income of $3.1 million, or $0.04 per diluted share, reported in the fourth quarter of 2009. Fourth quarter 2010 non-GAAP results exclude $2.5 million in stock-based compensation expense and related income taxes.

For fiscal year 2010, total revenues were $111.7 million, compared to $139.5 million reported in 2009. GAAP net loss was $31.6 million, or ($0.46) per share, compared to GAAP net loss of $6.7 million, or ($0.10) per share, reported in fiscal year 2009.

On a non-GAAP basis, the Company reported a net loss of $17.5 million, or ($0.26) per share, for fiscal year 2010, which compares to non-GAAP net income of $9.3 million, or $0.13 per diluted share, reported for 2009. The GAAP to non-GAAP reconciling items, for the three months and years ended December 31, 2010 and 2009 can be found in “The Reconciliations of GAAP to Non-GAAP Financial Measures” attached to this press release.

BigBand closed fiscal year 2010 with $143.5 million in cash, cash equivalents and marketable securities.

“While our financial performance in fiscal year 2010 and our current outlook are disappointing, our recent progress with our customers and products is promising,” commented Amir Bassan-Eskenazi, President and CEO of BigBand Networks. “We are encouraged by our recent SDV win in Asia, we have received promising feedback on the MSP QAM and are experiencing growing interest in our vIP PASS and Advanced Advertising solutions. We are optimistic that the strategy we are pursuing will allow for improved financial results in the second half of 2011.”

First Quarter 2011 Business Outlook

For the first quarter of 2011, management provides the following outlook:

• Net revenues are expected to be in the range of $17.0 million to $20.0 million
• GAAP gross margins are expected to be in the range of 49% to 52%
• Non-GAAP gross margins are expected to be in the range of 52% to 55%
• GAAP operating expenses are expected to be in the range of $21.5 million to $22.5 million
• Non-GAAP operating expenses are expected to be in the range of $17.0 million to $18.0 million
• GAAP net loss per share is expected to be in the range of ($0.17) to ($0.20)
• Non-GAAP net loss per share is expected to be in the range of ($0.09) to ($0.12)

The following table shows our non-GAAP outlook for the quarter ending March 31, 2011 reconciled to our GAAP outlook. Our non-GAAP outlook excludes stock-based compensation and restructuring charges.

Estimated loss perShare

Low High GAAP net loss ($0.17) ($0.20) Stock-based compensation 0.05 0.05 Restructuring charges 0.03 0.03 Non-GAAP net loss ($0.09) ($0.12)

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 or restructuring charges in managing our operations and related taxes. 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 is that this charge is 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 loss, net loss 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 February 1, 2011

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 +1-877-941-2068 for the U.S. or Canada and +1-480-629-9712 for international callers. The webcast will be available live on the Investor Relations section of the Company’s corporate website at www.bigbandnet.com, 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 February 1, 2011 until 11:59 p.m. Pacific Time on February 8, 2011, by dialing +1-800-406-7325 or +1-303-590-3030 for callers outside the U.S. and Canada, and entering passcode 4401235#.

Cautionary Statement

The statements in this release regarding recent progress with customers being promising, being encouraged by our recent SDV win, promising feedback on our MSP QAM, growing interest in our viP PASS and Advanced Advertising solutions, being optimistic that our strategy will allow for improved financial results in the second half of 2011 and our GAAP and non-GAAP business outlook, as applicable, with respect to the quarter ending March 31, 2011 (including revenues, gross margins, operating expenses and net 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: unexpected fluctuations in our business due to adverse changes in the global economy, global credit issues, volatility in equity markets, changes in demand for video services, the market acceptance of our products; 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 and most recent Report on Form 10-Q for the quarter ended September 30, 2010. You can obtain copies of the reports on the SEC's Web site (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 February 1, 2011 press release, or to reflect the occurrence of unanticipated events.

About BigBand Networks

BigBand Networks, Inc. [NASDAQ: BBND] provides broadband service providers with innovative digital video networking 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 customers in North America, Asia and Europe -- including seven of the ten largest cable and telco service providers in North America. 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 December 31, As of December 31,   2010     2009   ASSETS Current assets: Cash and cash equivalents $ 21,537 $ 24,894 Marketable securities   122,012     147,014   Total cash, cash equivalents and marketable securities 143,549 171,908 Accounts receivable, net 5,001 18,495 Inventories, net 11,117 4,933 Prepaid expenses and other current assets   4,190     6,177   Total current assets 163,857 201,513   Property and equipment, net 8,088 11,417 Goodwill 1,656 1,656 Other non-current assets   7,170     9,002   Total assets $ 180,771   $ 223,588     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,656 $ 9,483 Accrued compensation and related benefits 5,178 5,023 Current portion of deferred revenues, net 18,143 32,428 Current portion of other liabilities   4,266     7,083   Total current liabilities 32,243 54,017   Deferred revenues, net, less current portion 8,327 12,438 Other liabilities, less current portion 1,692 2,642 Accrued long-term Israeli severance pay 4,376 4,215   Stockholders’ equity: Common stock 70 67 Additional paid-in-capital 299,003 283,704 Accumulated other comprehensive income 253 124 Accumulated deficit   (165,193 )   (133,619 ) Total stockholders’ equity   134,133     150,276   Total liabilities and stockholders’ equity $ 180,771   $ 223,588   BigBand Networks, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts, Unaudited)       Three Months Ended December 31, Year Ended December 31,   2010     2009     2010     2009     Net revenues: Products $ 15,859 $ 24,867 $ 73,606 $ 93,662 Services   10,477     9,531     38,109     45,852   Total net revenues 26,336 34,398 111,715 139,514   Cost of net revenues: Products 9,171 11,768 42,705 45,961 Services   2,669     3,215     11,850     12,384   Total cost of net revenues   11,840     14,983     54,555     58,345   Gross profit   14,496     19,415     57,160     81,169     Operating expenses: Research and development 11,889 12,123 50,923 46,431 Sales and marketing 4,408 5,888 20,939 24,201 General and administrative 3,932 4,753 16,492 18,862 Restructuring charges - - 900 1,356 Class action litigation charges   -     -     -     477   Total operating expenses   20,229     22,764     89,254     91,327     Operating loss (5,733 ) (3,349 ) (32,094 ) (10,158 ) Interest income 182 433 1,259 2,570 Other expense, net   (84 )   (156 )   (401 )   (218 ) Loss before provision for (benefit from) income taxes (5,635 ) (3,072 ) (31,236 ) (7,806 ) Provision for (benefit from) income taxes   275     (1,834 )   338     (1,067 ) Net loss $ (5,910 ) $ (1,238 ) $ (31,574 ) $ (6,739 )   Basic net loss per common share $ (0.09 ) $ (0.02 ) $ (0.46 ) $ (0.10 ) Diluted net loss per common share $ (0.09 ) $ (0.02 ) $ (0.46 ) $ (0.10 )   Shares used in GAAP basic net loss per common share   69,380     66,738     68,389     65,936   Shares used in GAAP diluted net loss per common share   69,380     66,738     68,389     65,936   BigBand Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts, Unaudited)     Three Months Ended December 31, 2010 GAAP Results

Stock-based Compensation and Income Taxes

Non-GAAPResults

    Net revenues: Products $ 15,859 $ - $ 15,859 Services   10,477     -     10,477   Total net revenues   26,336     -     26,336     Cost of net revenues: Products 9,171 (212 ) 8,959 Services   2,669     (170 )   2,499   Total cost of net revenues   11,840     (382 )   11,458   Gross profit   14,496     382     14,878     Operating expenses: Research and development 11,889 (945 ) 10,944 Sales and marketing 4,408 (370 ) 4,038 General and administrative   3,932     (665 )   3,267   Total operating expenses   20,229     (1,980 )   18,249     Operating loss (5,733 ) 2,362 (3,371 ) Interest income 182 - 182 Other expense   (84 )   -     (84 ) Loss before provision for income taxes (5,635 ) 2,362 (3,273 ) Provision for income taxes   275     (138 )   137   Net loss $ (5,910 ) $ 2,500   $ (3,410 )   Basic net loss per common share $ (0.09 ) $ (0.05 ) Diluted net loss per common share $ (0.09 ) $ (0.05 )   Shares used in basic net loss per common share   69,380     69,380   Shares used in diluted net loss per common share   69,380     69,380   BigBand Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts, Unaudited)       Year Ended December 31, 2010 GAAP Results

Stock-basedCompensation

Restructuringcharges

Non-GAAP Results

    Net revenues: Products $ 73,606 $ - $ - $ 73,606 Services   38,109     -     -     38,109   Total net revenues   111,715     -     -     111,715     Cost of net revenues: Products 42,705 (1,227 ) - 41,478 Services   11,850     (877 )   -   10,973   Total cost of net revenues   54,555     (2,104 )   -     52,451   Gross profit   57,160     2,104     -     59,264     Operating expenses: Research and development 50,923 (4,889 ) - 46,034 Sales and marketing 20,939 (2,105 ) - 18,834 General and administrative 16,492 (3,937 ) - 12,555 Restructuring charges   900     -     (900 )   -   Total operating expenses   89,254     (10,931 )   (900 )   77,423     Operating loss (32,094 ) 13,035 900 (18,159 ) Interest income 1,259 - - 1,259 Other expense   (401 )   -     -     (401 ) Loss before provision for income taxes (31,236 ) 13,035 900 (17,301 ) Provision for income taxes   338     (97 )   -     241   Net loss $ (31,574 ) $ 13,132   $ 900   $ (17,542 )   Basic net loss per common share $ (0.46 ) $ (0.26 ) Diluted net loss per common share $ (0.46 ) $ (0.26 )   Shares used in basic net loss per common share   68,389     68,389   Shares used in diluted net loss per common share   68,389     68,389   BigBand Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts and percentages, Unaudited)       Three Months Ended December 31, Year Ended December 31, 2010 2009 2010 2009   GAAP and Non-GAAP net revenues as reported $ 26,336 $ 34,398 $ 111,715 $ 139,514   GAAP cost of net revenues as reported $ 11,840 $ 14,983 $ 54,555 $ 58,345 Inventory recovery relating to CMTS platform - - - 73 Stock-based compensation expense (382) (563) (2,104) (2,084) Non-GAAP cost of net revenues $ 11,458 $ 14,420 $ 52,451 $ 56,334   GAAP gross profit as reported $ 14,496 $ 19,415 $ 57,160 $ 81,169 Inventory recovery relating to CMTS platform - - - (73) Stock-based compensation expense 382 563 2,104 2,084 Non-GAAP gross profit $ 14,878 $ 19,978 $ 59,264 $ 83,180   As a percentage of net revenues: GAAP gross profit as reported 55.0% 56.4% 51.2% 58.2% Non-GAAP gross profit 56.5% 58.1% 53.0% 59.6%   GAAP operating loss as reported $ (5,733) $ (3,349) $ (32,094) $ (10,158) Inventory recovery relating to CMTS platform - - - (73) Stock-based compensation expense: - Cost of net revenues 382 563 2,104 2,084 - Research and development 945 1,321 4,889 4,887 - Sales and marketing 370 681 2,105 2,432 - General and administrative 665 1,356 3,937 4,816 Restructuring charges - - 900 1,356 Class action litigation charges - - - 477 Non-GAAP operating (loss) income $ (3,371) $ 572 $ (18,159) $ 5,821   GAAP net loss as reported $ (5,910) $ (1,238) $ (31,574) $ (6,739) Inventory recovery relating to CMTS platform - - - (73) Stock-based compensation expense 2,362 3,921 13,035 14,219 Restructuring charges - - 900 1,356 Class action litigation charges - - - 477 Tax benefits 138 377 97 25 Non-GAAP net (loss) income $ (3,410) $ 3,060 $ (17,542) $ 9,265   Basic Non-GAAP net (loss) income per common share $ (0.05) $ 0.05 $ (0.26) $ 0.14 Diluted Non-GAAP net (loss) income per common share $ (0.05) $ 0.04 $ (0.26) $ 0.13   Shares used in Basic Non-GAAP net (loss) income per common share 69,380 66,738 68,389 65,936   Shares used in Diluted Non-GAAP net (loss) income per common share 69,380 69,027 68,389 68,727