BBND Bigband Networks (MM)

BigBand Networks, Inc. (NASDAQ: BBND), a leader in digital video networking, today reported financial results for the first quarter ended March 31, 2011.

For the first quarter, total revenues were $18.4 million. This compares to revenues of $32.2 million reported in the first quarter of 2010. GAAP net loss for the first quarter of 2011 was $12.8 million, or ($0.18) per share, compared to GAAP net loss of $8.8 million, or ($0.13) per share, reported in the first quarter of 2010.

On a non-GAAP basis, the Company reported a net loss of $8.0 million, or ($0.11) per share, in the first quarter of 2011, which compares to a non-GAAP net loss of $5.0 million, or ($0.07) per share, reported in the first quarter of 2010. First quarter 2011 non-GAAP results exclude $2.0 million of restructuring charges and $2.8 million in stock-based compensation expense and related income taxes.

The GAAP to non-GAAP reconciling items, for the quarters ended March 31, 2011 and 2010 can be found in “The Reconciliations of GAAP to Non-GAAP Financial Measures” attached to this press release.

The Company ended the first quarter of 2011 with $136.3 million in cash, cash equivalents and marketable securities.

“During the quarter we executed on our strategic priorities. We are encouraged by the recent progress we have made with customer trials and are pleased with our MSP-based solutions, which are being well received by our customers. We expect our new solutions to contribute to revenues in the second half of 2011 and beyond,” said Amir Bassan-Eskenazi, President and CEO of BigBand Networks.

Second Quarter 2011 Business Outlook

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

• Net revenues are expected to be in the range of $18 million to $20 million
• GAAP net loss per share is expected to be in the range of ($0.13) to ($0.15)
• Non-GAAP net loss per share is expected to be in the range of ($0.09) to ($0.11)

The following table shows our non-GAAP outlook for the quarter ending June 30, 2011 reconciled to our GAAP outlook. Our non-GAAP outlook excludes stock-based compensation charges.

Estimated loss per Share Low High GAAP net loss ($0.13 ) ($0.15 ) Stock-based compensation

0.04

 

0.04

  Non-GAAP net loss ($0.09 ) ($0.11 )

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 and related taxes 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 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 loss, 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 have access to 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 April 28, 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 +1-877-941-2322 for the U.S. or Canada and +1-480-629-9715 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 April 28, 2011 until 11:59 p.m. Pacific Time on May 5, 2011, by dialing +1-800-406-7325 or +1-303-590-3030 for callers outside the U.S. and Canada, and entering passcode 4433883#.

Cautionary Statement

The statements in this release regarding recent progress with customer trials, being pleased with our MSP-based solutions, expecting our new solutions to contribute to revenues in the second half of 2011 and beyond, and our GAAP and non-GAAP business outlook, as applicable, with respect to the quarter ending June 30, 2011 (including revenues, stock based compensation 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 delays in the delivery of our solutions, 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 2010 and other reports it files with the SEC. 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 April 28, 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 March 31,   As of December 31,   2011     2010   ASSETS Current assets: Cash and cash equivalents $ 15,671 $ 21,537 Marketable securities   120,649     122,012   Total cash, cash equivalents and marketable securities 136,320 143,549 Accounts receivable, net 8,729 5,001 Inventories, net 12,474 11,117 Prepaid expenses and other current assets   3,710     4,190   Total current assets 161,233 163,857   Property and equipment, net 6,872 8,088 Goodwill 1,656 1,656 Other non-current assets   6,779     7,170   Total assets $ 176,540   $ 180,771     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 7,935 $ 4,656 Accrued compensation and related benefits 6,605 5,178 Current portion of deferred revenues, net 19,894 18,143 Current portion of other liabilities   4,333     4,266   Total current liabilities 38,767 32,243   Deferred revenues, net, less current portion 7,545 8,327 Other liabilities, less current portion 1,582 1,692 Accrued long-term Israeli severance pay 4,842 4,376   Stockholders’ equity: Common stock 70 70 Additional paid-in-capital 301,740 299,003 Accumulated other comprehensive (loss) income (11 ) 253 Accumulated deficit   (177,995 )   (165,193 ) Total stockholders’ equity   123,804     134,133   Total liabilities and stockholders’ equity $ 176,540   $ 180,771   BigBand Networks, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts, Unaudited)   Three Months Ended March 31,   2011     2010     Net revenues: Products $ 9,529 $ 24,881 Services   8,836     7,354   Total net revenues 18,365 32,235   Cost of net revenues: Products 5,766 13,924 Services   3,043     3,277   Total cost of net revenues   8,809     17,201   Gross profit   9,556     15,034     Operating expenses: Research and development 11,383 13,492 Sales and marketing 5,112 6,050 General and administrative 3,814 4,526 Restructuring charges   2,007     -   Total operating expenses   22,316     24,068     Operating loss (12,760 ) (9,034 ) Interest income 206 515 Other expense, net   (30 )   (88 ) Loss before provision for income taxes (12,584 ) (8,607 ) Provision for income taxes   218     162   Net loss $ (12,802 ) $ (8,769 )   Basic net loss per common share $ (0.18 ) $ (0.13 ) Diluted net loss per common share $ (0.18 ) $ (0.13 )   Shares used in GAAP basic net loss per common share   69,842     67,313   Shares used in GAAP diluted net loss per common share   69,842     67,313   BigBand Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts, Unaudited)       Three Months Ended March 31, 2011 GAAP Results

Stock-basedCompensation

and Income Taxes

Restructuringcharges

Non-GAAP Results

    Net revenues: Products $ 9,529 $ - $ - $ 9,529 Services   8,836     -     -     8,836   Total net revenues   18,365     -     -     18,365     Cost of net revenues: Products 5,766 (197 ) - 5,569 Services   3,043     (219 )   -     2,824   Total cost of net revenues   8,809     (416 )   -     8,393   Gross profit   9,556     416     -     9,972     Operating expenses: Research and development 11,383 (1,105 ) - 10,278 Sales and marketing 5,112 (368 ) - 4,744 General and administrative 3,814 (799 ) - 3,015 Restructuring charges   2,007     -     (2,007 )   -   Total operating expenses   22,316     (2,272 )   (2,007 )   18,037     Operating loss (12,760 ) 2,688 2,007 (8,065 ) Interest income 206 - - 206 Other expense   (30 )   -     -     (30 ) Loss before provision for income taxes (12,584 ) 2,688 2,007 (7,889 ) Provision for income taxes   218     (92 )   -     126   Net loss $ (12,802 ) $ 2,780   $ 2,007   $ (8,015 )   Basic net loss per common share $ (0.18 ) $ (0.11 ) Diluted net loss per common share $ (0.18 ) $ (0.11 )   Shares used in basic net loss per common share   69,842     69,842   Shares used in diluted net loss per common share   69,842     69,842   BigBand Networks, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts and percentages, Unaudited)   Three Months Ended March 31,   2011     2010     GAAP and Non-GAAP net revenues as reported $ 18,365   $ 32,235     GAAP cost of net revenues as reported $ 8,809 $ 17,201 Stock-based compensation expense   (416 )   (566 ) Non-GAAP cost of net revenues $ 8,393   $ 16,635     GAAP gross profit as reported $ 9,556 $ 15,034 Stock-based compensation expense   416     566   Non-GAAP gross profit $ 9,972   $ 15,600     As a percentage of net revenues: GAAP gross profit as reported   52.0 %   46.6 % Non-GAAP gross profit   54.3 %   48.4 %   GAAP operating loss as reported $ (12,760 ) $ (9,034 ) Stock-based compensation expense: - Cost of net revenues 416 566 - Research and development 1,105 1,322 - Sales and marketing 368 669 - General and administrative 799 1,201 Restructuring charges   2,007     -   Non-GAAP operating loss $ (8,065 ) $ (5,276 )   GAAP net loss as reported $ (12,802 ) $ (8,769 ) Stock-based compensation expense 2,688 3,758 Restructuring charges 2,007 - Tax benefits (adjustments)   92     (21 ) Non-GAAP net loss $ (8,015 ) $ (5,032 )   Basic Non-GAAP net loss per common share $ (0.11 ) $ (0.07 ) Diluted Non-GAAP net loss per common share $ (0.11 ) $ (0.07 )   Shares used in Basic Non-GAAP net loss per common share   69,842     67,313     Shares used in Diluted Non-GAAP net loss per common share   69,842     67,313