BigBand Announces First Quarter 2010 Results

BigBand Networks, Inc. (NASDAQ: BBND), a leader in digital video networking, today reported financial results for the first quarter ended March 31, 2010.

Revenues in the first quarter 2010 were $32.2 million compared to $43.9 million in the first quarter 2009.

GAAP net loss for the first quarter 2010 was $8.8 million, or ($0.13) per share, compared to GAAP net income of $2.3 million, or $0.03 per diluted share, for the first quarter 2009.

On a non-GAAP basis, the Company reported a net loss of $5.0 million, or ($0.07) per share, in the first quarter 2010. This compares to net income of $6.1 million, or $0.09 per diluted share, reported in the first quarter 2009.

The GAAP to non-GAAP reconciling items for the three months ended March 31, 2010 and 2009 can be found in "The Reconciliations of GAAP to Non-GAAP Financial Measures" attached to this press release.

The Company ended first quarter 2010 with $165.5 million of cash and investments.

Results for the first quarter 2010 were impacted by slower order activities and lower gross margins as a result of product mix. The Company expects this slower order activity, primarily related to IP Video solutions, to continue for the remainder of the year. As a result, the Company currently expects revenues for fiscal year 2010 to be in the range of $115.0 million to $125.0 million.

This week, the Company has taken a number of steps, including headcount reductions, to realign its expenses with its near-term revenue outlook. These steps are expected to yield annualized cost savings of approximately $7.0 million and result in one-time severance and restructuring charges of approximately $1.3 million in the second quarter 2010.

"We are disappointed with our results announced today and have taken actions to preserve cash while we continue to invest in solutions for longer-term growth,” commented Amir Bassan-Eskenazi, President and CEO of BigBand Networks. "BigBand has distinguished itself as a technology leader and innovator in supporting our customers’ evolving video network requirements. The market drivers for digital video networking remain strong - HDTV, IPTV, and increasingly 3DTV. These advanced media technologies enable enhanced consumer experiences and are the major drivers for our expected growth over the longer-term.”

Second Quarter 2010 Business Outlook:

For the second quarter 2010, management provides the following outlook:

• Net revenues are expected to be in the range of $26 million to $28 million.
• GAAP gross margins are expected to be in the range of 48% to 50%.
• Non-GAAP gross margins are expected to be in the range of 50% to 52%.
• GAAP operating expenses, including restructuring charges are expected to be in the range of $25.0 million to $26.0 million.
• Non-GAAP operating expenses, excluding stock-based compensation expense and restructuring charges, are expected to be in the range of $20 million to $21 million.
• GAAP and Non-GAAP tax benefit is expected to be approximately $0.4 million.
• GAAP net loss per share is expected to be in the range of ($0.15) to ($0.17).
• Non-GAAP net loss per share is expected to be in the range of ($0.07) to ($0.09).

The following table shows our GAAP outlook for the quarter ending June 30, 2010 reconciled to our non-GAAP outlook. Our non-GAAP outlook excludes stock-based compensation and restructuring charges.

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 in managing our operations, and related taxes. 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 relates to these charges being non-cash in nature. We exclude restructuring charges as they are one-time events. As a result, we use calculations of non-GAAP operating income, net income, net income 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 review 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 May 6, 2010

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 +1-877-941-1429 for the U.S. or Canada and +1-480-629-9666 for international callers. The webcast will be available live on the Investor Relations section of the Company’s corporate website, 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 May 6, 2010 until 11:59 p.m. Pacific Time on May 13, 2010 by dialing +1-800-406-7325 or +1-303-590-3030 for callers outside the U.S. and Canada, and entering passcode 4284255#.

Cautionary Statement

The statements in this release regarding the slower order pattern continuing for the remainder of 2010, the expected revenue range for fiscal 2010, expected annualized cost savings and the one-time severance and restructuring charges in the second quarter 2010 associated with our restructuring activity, our expected investments in new solutions, the expected strength of the market drivers for the digital video networking market and our expected growth over the longer term as a result of these drivers, and our GAAP and non-GAAP business outlook, as applicable, with respect to the quarter ending June 30, 2010 (including revenues, gross margins, operating expenses, tax benefit 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: changes in demand for video services, the market acceptance of our products; the financial strengths of our current and potential customers; the unexpected fluctuations in product mix and 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 Annual Report on Form 10-K for fiscal year 2009 and other reports it files with the SEC. You can obtain copies of the reports on the SEC's Web site (http://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 May 6, 2010 press release, or to reflect the occurrence of unanticipated events.

About BigBand Networks

BigBand Networks, Inc. (NASDAQ: BBND) provides service providers with innovative network 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 service providers -- including seven of the ten largest service providers in the U.S. -- and leading cable and telco service providers in North America, Asia and Europe. 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.