While BigBand Networks' BBND third-quarter financial results (along with management's projection for the fourth quarter) point to full-year results well below our estimates, we are sticking with our fair value estimate. As a result of cautious capital spending on the part of the service providers, 2009 revenue is shaping up well below our expectation. However, the gross margin is holding steady, and operating expense dollars are tracking our expectations. The company has burned through some of its cash hoard but still holds about $2.40 per share, which is in line with our Consider Buying price. Since we view BigBand as an early-stage growth company, we're not too concerned that the firm has continued to spend heavily on research and development and marketing during the downturn. If the company continues to dip into its cash supply to fund these activities in 2010 and beyond, we'd consider cutting our fair value estimate. But for now, our long-term thesis on the share is unchanged.
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Analyst Notes
08-06-09 | 3:54PM BigBand Revenues Slow in 2Q
05-06-09 | 2:28PM BigBand Warns of Weak Results in 2Q
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