BigBand Announces Second Quarter 2010 Results

BigBand Networks, Inc., (NASDAQ:BBND), a leader in digital video networking, today reported financial results for the second quarter ended June 30, 2010.

Revenues for the second quarter of 2010 were $26.4 million, compared to $39.0 million for the second quarter of 2009. GAAP net loss for the second quarter of 2010 was $9.6 million, or ($0.14) per share, compared to GAAP net income of $3.1 million, or $0.04 per diluted share, reported in the second quarter of 2009.

On a non-GAAP basis, the Company reported a net loss of $5.1 million, or ($0.07) per share, in the second quarter of 2010. This compares to net income of $6.0 million, or $0.09 per diluted share, reported in the second quarter of 2009. Second quarter 2010 non-GAAP results exclude primarily $3.6 million in stock-based compensation expense and $1.0 million related to restructuring charges. Our non-GAAP results for the quarters reflect the adjustments described in the Reconciliation of GAAP to non-GAAP Financial Measures attached to this press release.

The Company closed the second quarter of 2010 with $163.1 million in cash and marketable securities.

"During the second quarter, we increased our Switched Digital Video footprint to more than 37 million households and worked with customers to advance their IPTV deployments,” commented Amir Bassan-Eskenazi, President and CEO of BigBand Networks. "I am encouraged by the progress we have made in our products and technology. We expect these investments to yield long-term growth and shareholder value.”

Third Quarter 2010 Business Outlook:

For the third quarter of 2010, management provides the following outlook:

• Net revenues are expected to be in the range of $24 million to $27 million.
• GAAP gross margins are expected to be in the range of 52% to 54%.
• Non-GAAP gross margins are expected to be in the range of 54% to 56%.
• GAAP operating expenses are expected to be in the range of $22.0 million to $22.5 million.
• Non-GAAP operating expenses, excluding stock-based compensation expense, are expected to be in the range of $19.0 million to $19.5 million.
• GAAP net loss per share is expected to be in the range of ($0.11) to ($0.14).
• Non-GAAP net loss per share is expected to be in the range of ($0.06) to ($0.09).

The following table shows our non-GAAP outlook for the quarter ending September 30, 2010 reconciled to our GAAP outlook.

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 and related taxes, or restructuring charges in managing our operations. 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 August 4, 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 +1-888-549-7704 for the U.S. or Canada and +1-480-629-9857 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 August 4, 2010 until 11:59 p.m. Pacific Time on August 11, 2010, by dialing +1-800-406-7325 or +1-303-590-3030 for callers outside the U.S. and Canada, and entering passcode 4329716#.

Cautionary Statement

The statements in this release regarding our progress on newer products, the impact of these newer products on our future growth and shareholder value, and our GAAP and non-GAAP business outlook, as applicable, with respect to the quarter ending September 30, 2010 (including revenues, gross margins, operating expenses and 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; our ability to develop our new products on a timely basis; the financial strengths of our current and potential customers; the fluctuations in 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 Report on Form 10-K for fiscal year 2009. 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 August 4, 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.