Thursday, September 27, 2007
WOW! Was all I could say once the headlines scrolled across the newswire. This was a monumental miss, or a Big Bang kinda miss by BigBand Networks (BBND). It does not get uglier then this. BBND expects revenues to be in the range of $35-$39m vs. expectations of $56m. Company gave a list of excuses for the miss (obviously you can enjoy reading the list in the release). The lessons to learn from this miss is that one-trick ponies that compete in this vigorously competitive market are not for faint-hearted, customer concentration issues are rarely a one-quarter issue and at the end of the day customers could care less for their vendors stock performance. BBND had weak results last quarter as well even though they blamed it on lawsuit expenses last time. But with 5 customers accounting for 73% of revenues last quarter, and two accounting for most of that 73% its a precarious situation. BBND has the technology lead at one time but as development of market/deployments has been slower than expected and as competitors catch up the realities of running a business overrule any technological advantage and as always economics wins over "neat"-technology.
I do feel sorry for John Anthony over at Cowen & Co on of Wall Street's Finest as Jeff Matthews likes to call them- three of his most favorite names include BBND (the other two haven't done much for investors either- PLCM and OPTM).