BigBand Networks

Neutral (2)

 

Pure Play on Digital Video Networking

 

Analysts

John Marchetti

(646) 562-1337

john.marchetti@cowen.com

 

Varun Marwah

(646) 562-1359

varun.marwah@cowen.com

 

 

Conclusion: Longer term, we believe BigBand is well positioned to benefit from the secular trend of increasing bandwidth needs by cable MSO's and telcos leading to demand for the company’s Switched Digital Video (SDV) and IPTV platforms. However, order delays and limited visibility into near-term demand keeps us Neutral on shares, as we see limited opportunities for positive estimate revisions.

n    Key Issues. (1) Update on international expansion, which has shown little traction to date; (2) Opportunities for penetration into new market adjacencies; (3) Management expectation for customer capex and outlook for SDV and IPTV deployments; and (4) Update on the competitive and pricing landscape, including MSO priorities.

n    Corporate Profile. BigBand Networks is a communications equipment vendor with a leading position in Digital Video Networking (DVN) infrastructure. The company’s platforms are designed to reliably and efficiently deliver video solutions over a broad range of services, including digital TV, high-definition TV, advanced advertising, video-on-demand and interactive TV. BigBand has over 200 customers globally, including 8 of the top 10 service providers in North America.

 

BBND (05/20)

$2.27

 Revenue $MM

     

Mkt cap

$158.4MM

FY

2010

2011E

2012E

     

Dil shares out

69.8MM

Dec

Actual

Prior

Current

Prior

Current

     

     

Avg daily vol

255.1K

Q1

32.2

—

18.4A

—

—

     

     

52-wk range

$2.1-3.3

Q2

26.4

—

18.7

—

—

     

     

Dividend

Nil

Q3

26.8

—

20.3

—

—

     

     

Dividend yield

Nil

Q4

26.3

—

21.9

—

—

     

     

BV/sh

$1.77

Year

111.7

—

79.3

—

89.5

     

     

Net cash/sh

$1.95

EV/S

—

—

0.5x

—

0.5x

     

     

Debt/cap

0.0%

     

     

     

     

     

     

     

     

ROIC (LTM)

2.4%

 

 

 

5-yr fwd EPS

NA

EPS* $

growth (Norm)

 

FY

2010

2011E

2012E

     

 

Dec

Actual

Prior

Current

Prior

Current

     

     

 

 

Q1

(0.07)

—

(0.11)A

—

—

     

     

 

 

Q2

(0.07)

—

(0.10)

—

—

     

     

 

 

Q3

(0.06)

—

(0.10)

—

—

     

     

S&P 500

1333.3

Q4

(0.05)

—

(0.09)

—

—

     

     

 

 

Year

(0.26)

—

(0.41)

—

(0.38)

     

     

 

 

P/E

—

—

—

—

—

     

     

 

 

     

     

     

     

     

     

     

     

 

*Pro forma estimates exclude certain one-time charges, amortization of intangibles and amortization of deferred stock-based compensation

 

 

BBND Income Statement ($MM)

Source:  Company Data, Cowen and Company