BigBand Networks Inc. (BBND, Financial) filed Quarterly Report for the period ended 2011-09-30.
Bigband Networks Inc. has a market cap of $158.2 million; its shares were traded at around $2.24 with and P/S ratio of 1.4.
Product Gross Margin. Product gross margin for the three months ended September 30, 2011 was 35.8% compared to 37.2% for the three months ended September 30, 2010. This decrease was primarily due to a $2.3 million decrease in product revenues that resulted in a lower absorption of our fixed manufacturing costs. Our write-downs for inventory charged to cost of net product revenues were $1.6 million and $0.5 million for the three months ended September 30, 2011 and 2010, respectively, primarily related to a projected decrease in demand for some of our legacy products that will be replaced by our newer solutions commencing in 2012. Based on our forecasted booking and shipment projections, we believe that our provision for excess and obsolete inventory was adequate and that our current inventory level is not expected to have a material impact on our pricing and gross margins for the three months ending December 31, 2011. We could be required to increase our inventory provisions if there were to be sudden and significant decreases in demand for our products or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements. During the three months ended September 30, 2010, we recorded a one-time expense to cost of net product revenues of $1.5 million, which was the net book value of quadrature amplitude modulation edge resource management technology license (QAM purchased software) as of September 30, 2010, as there were no estimated future revenues for this purchased technology in the near term. Manufacturing overhead expenses for the three months ended September 30, 2011 were $1.2 million compared to $1.9 million for the three months ended September 30, 2010, a decrease of 39.8%. This decrease was primarily due to decreased wages and benefits of $0.3 million due to lower headcount, and a $0.3 million decrease in other discretionary expenses due to our cost containment efforts. Product gross margin for the three months ended September 30, 2011 and 2010 included stock-based compensation expense of $0.2 million and $0.3 million, respectively.
Product gross margin for the nine months ended September 30, 2011 was 38.1% compared to 41.9% for the nine months ended September 30, 2010. This decrease was primarily due to a $24.0 million decrease in product revenues that resulted in a lower absorption of our fixed manufacturing costs. Our write-downs for inventory charged to cost of net product revenues were $2.6 million and $1.0 million for the nine months ended September 30, 2011 and 2010, respectively, related primarily to a projected decrease in demand for some of our legacy products that will be replaced by our newer solutions commencing in 2012. During the nine months ended September 30, 2010, we recorded an expense to cost of net product revenues related to QAM purchased software of $1.5 million, as further described in the previous paragraph. We incurred zero expense for this in the nine months ended September 30, 2011. Manufacturing overhead expenses for the nine months ended September 30, 2011 were $3.8 million compared to $6.4 million for the nine months ended September 30, 2010, a decrease of 41.6%. This decrease was primarily due to a $1.2 million decrease in wages and benefits following lower headcount, and a $1.1 million decrease in our facility, travel and other discretionary expenses due to our cost containment efforts. Product gross margin for the nine months ended September 30, 2011 and 2010 included stock-based compensation expense of $0.6 million and $1.0 million, respectively.
Research and development expense was $32.1 million for the nine months ended September 30, 2011, or 52.9% of net revenues, compared to $39.0 million for the nine months ended September 30, 2010, or 45.7% of net revenues. The decrease was primarily due to a $2.4 million decrease in wages and benefits related to a 18% decrease in headcount, a $1.4 million decrease in independent contractor costs, a $0.8 million decrease in prototype expense and a $0.5 million decrease in facility expenses. Stock-based compensation decreased to $3.1 million for the nine months ended September 30, 2011 compared to $3.9 million for the nine months ended September 30, 2010, primarily due to lower headcount and lower stock prices on the grant dates.
General and administrative expense was $11.5 million for the nine months ended September 30, 2011, or 19.0% of net revenues, compared to $12.6 million for the nine months ended September 30, 2010, or 14.6% of net revenues. The decrease was primarily due to a 9% decrease in headcount that resulted in a $1.3 million decrease in stock-based compensation and a $0.7 million decrease in personnel costs. These were partially offset by $0.5 million increases in acquisition-related expensed incurred during the nine months ended September 30, 2011 and a $0.6 million increase in litigation-related activities. We expect acquisition-related expenses to increase significantly for the three months ending December 31, 2011 compared to the three months ended September 30, 2011. General and administrative expense for the nine months ended September 30, 2011 and 2010 included stock-based compensation expense of $2.0 million and $3.3 million, respectively.
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Bigband Networks Inc. has a market cap of $158.2 million; its shares were traded at around $2.24 with and P/S ratio of 1.4.
Highlight of Business Operations:
24 Index AT&T, a new customer announced in 2011, represented slightly less than 20% of our net revenues for the three months ended September 30, 2011 and slightly less than 10% of our net revenues for the nine months ended September 30, 2011. We expect revenues from AT&T will continue to represent more than 10% of our net revenues for the three months ending December 31, 2011 as it continues the deployment of our IPTV products on our Media Services Platform (MSP) as part of its U-verse® TV s local ad insertion solution. Time Warner Cable represented slightly more than 10% of our net revenues for the three months ended September 30, 2011 compared to greater than 30% of our net revenues for the three months ended September 30, 2010. For the nine months ended September 30, 2011, Time Warner Cable represented approximately 15% of our net revenues compared to slightly less than 40% for the nine months ended September 30, 2010. The decrease in absolute dollars and as a percentage of revenues was primarily due to a decline in order volume for our Switched Digital Video (SDV) products. Cox Communications represented less than 10% of our net revenues for the three months ended September 30, 2011 compared to slightly more than 20% of our net revenues for the three months ended September 30, 2010. For the nine months ended September 30, 2011, Cox Communications represented less than 10% of our net revenues compared to slightly more than 10% of our net revenues for the nine months ended September 30, 2010. The decrease in absolute dollars and as a percentage of revenues was due to a decline in order volume for our SDV products.Product Gross Margin. Product gross margin for the three months ended September 30, 2011 was 35.8% compared to 37.2% for the three months ended September 30, 2010. This decrease was primarily due to a $2.3 million decrease in product revenues that resulted in a lower absorption of our fixed manufacturing costs. Our write-downs for inventory charged to cost of net product revenues were $1.6 million and $0.5 million for the three months ended September 30, 2011 and 2010, respectively, primarily related to a projected decrease in demand for some of our legacy products that will be replaced by our newer solutions commencing in 2012. Based on our forecasted booking and shipment projections, we believe that our provision for excess and obsolete inventory was adequate and that our current inventory level is not expected to have a material impact on our pricing and gross margins for the three months ending December 31, 2011. We could be required to increase our inventory provisions if there were to be sudden and significant decreases in demand for our products or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements. During the three months ended September 30, 2010, we recorded a one-time expense to cost of net product revenues of $1.5 million, which was the net book value of quadrature amplitude modulation edge resource management technology license (QAM purchased software) as of September 30, 2010, as there were no estimated future revenues for this purchased technology in the near term. Manufacturing overhead expenses for the three months ended September 30, 2011 were $1.2 million compared to $1.9 million for the three months ended September 30, 2010, a decrease of 39.8%. This decrease was primarily due to decreased wages and benefits of $0.3 million due to lower headcount, and a $0.3 million decrease in other discretionary expenses due to our cost containment efforts. Product gross margin for the three months ended September 30, 2011 and 2010 included stock-based compensation expense of $0.2 million and $0.3 million, respectively.
Product gross margin for the nine months ended September 30, 2011 was 38.1% compared to 41.9% for the nine months ended September 30, 2010. This decrease was primarily due to a $24.0 million decrease in product revenues that resulted in a lower absorption of our fixed manufacturing costs. Our write-downs for inventory charged to cost of net product revenues were $2.6 million and $1.0 million for the nine months ended September 30, 2011 and 2010, respectively, related primarily to a projected decrease in demand for some of our legacy products that will be replaced by our newer solutions commencing in 2012. During the nine months ended September 30, 2010, we recorded an expense to cost of net product revenues related to QAM purchased software of $1.5 million, as further described in the previous paragraph. We incurred zero expense for this in the nine months ended September 30, 2011. Manufacturing overhead expenses for the nine months ended September 30, 2011 were $3.8 million compared to $6.4 million for the nine months ended September 30, 2010, a decrease of 41.6%. This decrease was primarily due to a $1.2 million decrease in wages and benefits following lower headcount, and a $1.1 million decrease in our facility, travel and other discretionary expenses due to our cost containment efforts. Product gross margin for the nine months ended September 30, 2011 and 2010 included stock-based compensation expense of $0.6 million and $1.0 million, respectively.
Research and development expense was $32.1 million for the nine months ended September 30, 2011, or 52.9% of net revenues, compared to $39.0 million for the nine months ended September 30, 2010, or 45.7% of net revenues. The decrease was primarily due to a $2.4 million decrease in wages and benefits related to a 18% decrease in headcount, a $1.4 million decrease in independent contractor costs, a $0.8 million decrease in prototype expense and a $0.5 million decrease in facility expenses. Stock-based compensation decreased to $3.1 million for the nine months ended September 30, 2011 compared to $3.9 million for the nine months ended September 30, 2010, primarily due to lower headcount and lower stock prices on the grant dates.
General and administrative expense was $11.5 million for the nine months ended September 30, 2011, or 19.0% of net revenues, compared to $12.6 million for the nine months ended September 30, 2010, or 14.6% of net revenues. The decrease was primarily due to a 9% decrease in headcount that resulted in a $1.3 million decrease in stock-based compensation and a $0.7 million decrease in personnel costs. These were partially offset by $0.5 million increases in acquisition-related expensed incurred during the nine months ended September 30, 2011 and a $0.6 million increase in litigation-related activities. We expect acquisition-related expenses to increase significantly for the three months ending December 31, 2011 compared to the three months ended September 30, 2011. General and administrative expense for the nine months ended September 30, 2011 and 2010 included stock-based compensation expense of $2.0 million and $3.3 million, respectively.
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