SeaChange's Earnings Highlight Home Networking, Multi-Screen

In its earnings call last week, SeaChange International highlighted its new focus on software and multi-screen strategies and its move away from hardware. These strategies were reflected in its financial results for fourth quarter, ended January 31, 2011. The company posted total GAAP revenues for the fourth quarter of $61.4 million or 16 percent higher than revenues of $53.0 million for the fourth quarter of fiscal 2010.

Total revenues from its Software segment in the fourth quarter of fiscal 2011 were $46.1 million, which were $11.2 million or 32 percent higher than Software segment revenue in last year’s fourth quarter, largely attributed to increased revenues from VividLogic and eventIS as well as higher VoD and advertising maintenance revenues.
 
Conversely, the hardware-focused Servers and Storage segment generated revenues of $8.8 million in the fourth quarter of fiscal 2011, which were $3.5 million lower than revenues for the fourth quarter of fiscal 2010. The decrease stemmed from lower VoD server shipments to North American customers.

SeaChange CEO and Chairman Bill Styslinger said on the earnings call, "Our VividLogic software is enabling the use of DLNA in cable, which has a great level of interest and traction. In some cases the software is tied to tru2way or OCAP. In others, it enables HTML5 for Internet applications. I’m very excited about the potential our in-home software has for these apps and middleware for the next generation of CE devices such as iPads, smartphones and gateways.  All of this presents us with a lot of opportunity."

In terms of business wins, SeaChange says it has a partnership with an un-named, major North American MSO that is preparing for a 2011 iPad launch using SeaChange software. Its VividLogic business unit also signed a contract with Technicolor (formerly Thomson) to provide tru2way software in its set-top boxes. And Virgin Media, which uses SeaChange software, announced its expectation of more than 1 billion VoD views in 2011.

For fiscal year 2012 guidance, the company predicts, "The year starts a bit slow and gets stronger in the second half, which is not uncommon for SeaChange. Q1 will be offset with late-year increases primarily in the areas of advertising and in-home software."
 
As far as its hardware business, Styslinger said, "We turned our efforts to greatly reducing the cost structure. We continue to consider other options for that unit."
 
-Linda Hardesty