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Friday, September 27, 2002 |
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• FCC puts the brakes on Comcast merger review • Liberate posts wider Q1 loss • Gartner: Cable access gear revenue down • Companies embrace T-commerce • TVC parent files for Chapter 11 • SBC blames weak demand, regulations for job cuts • AT&T Broadband throws dial-up option into the mix
FCC puts the brakes on AT&T-Comcast review The FCC has temporarily stopped the clock on its 180-day revenue of Comcast Corp.'s proposed merger with AT&T Broadband. The clock will remained stopped for roughly 15 days while regulators review new information submitted by the companies pertaining to the merger. Media Bureau Chief Kenneth Ferree sent a letter to Comcast and AT&T earlier this week saying that the stoppage was related to "the submission of a significant amount of new information late in the proceeding." Case in point: during the last few weeks the agency has received hundreds of pages related to the plan to restructure AT&T's interest in Time Warner Entertainment. Although the FCC needs more time, the companies got a piece of good news from the Securities and Exchange Commission. The SEC will not object to the accounting treatment of the debt exchange offer for the proposed merger, according to a SEC filing. Related story:
Interactive software developer Liberate Technologies posted a wider year-over-year first quarter loss. The company cited the weakness in the cable and telecom sectors for the dip. The company reported a net loss of $249.6 million, or $2.35 a share, compared with a year-earlier net loss of $78 million, or 74 cents a share. Excluding $209.3 million write-off related to the impairment of goodwill, Liberate would have posted a loss of $16.8 million, or 16 cents a share, compared to a loss of $9.2 million, or 9 cents share a year ago. Revenue fell 40 percent from $17.3 million in Q1 2002 to $10.3 million. During the quarter, Liberate reduced its work force by 110 employees. "Adverse economic conditions within the cable and telecommunications sectors have materially impacted our quarterly revenue," said Liberate Chairman and CEO Mitchell Kertzman. "We were disappointed that the market fell off more quickly than we had anticipated and we are working to improve our ability to anticipate our quarterly revenue," he said. In June the company had forecast pro forma revenue of between $12 million and $14 million. Earlier this week, Shaw Communications announced it will power its video-on-demand service with Liberate's software platform. Looking ahead, Liberate is forecasting a fiscal second-quarter net loss, excluding charges, of between 12 cents and 16 cents a share. Analyst consensus loss estimates are 11 cents a share, according to Thomson First Call. Liberate shares were down 10 cents, or 5.8 percent, to $1.61 as of 12:18 p.m. EDT. Related stories:
Gartner: Cable access gear revenue down Global revenue for cable access platforms, a sector that includes cable modem termination systems (CMTSs), dropped by more than 9 percent to $181.9 million in the first half of 2002, Gartner Dataquest revealed in a new report (“Cable Broadband Access Platform Shipments Fall as Service Providers Tighten their Belts, 1H2002 Market Share and Forecast 2002-2006”). In comparison, the sector pulled down about $201.1 million in the first half of 2001, the research firm said. Gartner Dataquest forecasts that the cable access platform market is likely to recover by 2006, “ but will only reach and possibly slightly exceed revenue levels reached in 2000, or approximately $656.7 million.” The firm said the decline in the first half of this year was due to the general trend toward curbed capital spending by cable operators and other broadband service providers. Gartner Dataquest Principal Analyst Patti Reali noted that MSOs are not buying equipment to foster IP telephony services in big numbers yet, and that several operators have introduced tiered data services without the need to migrate to gear based on the QoS-sensitive DOCSIS 1.1 specification. Although cable operators are starting to buy and install 1.1-qualified CMTSs, they aren’t necessarily leveraging 1.1’s features. Even when MSOs ramp up their VoIP spending - perhaps as early as 2004 - the industry will still require a lengthy period before the service gains traction in the market, Reali said, noting that three years passed before traditional circuit-switched telephony services started to take off for MSOs such as AT&T Broadband and Cox Communications. According to Gartner Dataquest, Cisco Systems Inc. led CMTS vendors by mid-2002 with 57.3 percent of the market. ADC Telecommunications, bolstered by its line of “Cuda” CMTS equipment, usurped the number two slot from Motorola Broadband with 19 percent of the market. Motorola Broadband was third with an 8 percent market share, but could see a stronger second half, thanks in part to a deal it announced this week with Cox Communications, which is deploying an unspecified number of Motorola BSR 64000 CMTSs in four markets (Las Vegas, San Diego, New England and Omaha). Rounding out the CMTS sector, Terayon Communication Systems was fourth with 7.6 percent of the market, followed by Arris (2.7 percent) and Com21 Inc. (2.6 percent). Worldwide, DOCSIS-based gear dominated the category in the first
half of 2002 with an 86.6 percent market share and $157.5 million
in revenues.
Attention DirecTV Interactive subscribers: did that commercial for the latest Michelle Branch CD make you feel like you just gotta have it? Well, fret no more, you can shop via your television set on the 24/7 Music Choice interactive channel. DirecTV has partnered with Music Choice to launch the interactive television-commerce channel to enable DirecTV Interactive subscribers to shop for music and purchase CD titles from the comfort of their living rooms using their TV remote. The DirecTV Interactive service is powered by Wink Communications' iTV software. The service is beamed to roughly 7 million homes in the U.S. Yesterday, competition in the interactive space relaxed a bit. OpenTV announced plans to acquire Wink Communications from Liberate Broadband Interactive Television Inc. The company also snapped up ACTV Inc. Related story:
TVC parent files for Chapter 11 Communications Dynamics Inc. (CDI) is seeking relief from its creditors through a Chapter 11 bankruptcy protection filing. CDI subsidiary TVC Communications is included in the filing. The bankruptcy filing includes CDI's domestic subsidiaries. TVC, a distributor of products used to build and maintain cable TV systems, said its cash position augmented by the revenue will will be more than adequate to fund ongoing operations during the restructuring process. Mounting debt and the overall economic state of the telecom industry lead to CDI's decision to file for Chapter 11. In a letter to TVC customers, TVC President Robert Ackerman said, "In the late 1990s through 2001, the company borrowed money to expand to meet customers’ growing demands. The sudden downturn in the telecommunications market caused financial setbacks for several of our large customers, ultimately leading to a sharp decrease in our revenues. The combination of those factors limited CDI’s ability to pay back debt." CDI said the filing will enable it to continue to provide its customers with goods, services and support while it reorganizes. Business will continue without interruption, the company said in a prepared statement. Related story:
SBC blames weak demand, regulations for job cuts SBC Communications Inc. plans to hand out 11,000 more pink slips by early 2003. The regional Bell says "outmoded regulation" and the ongoing economic telecom slump fueled its decision. Wholesale prices set by regulators are below cost, according to Edward Whitacre, SBC Chairman and CEO. These price structures have enabled competitors to purchase network access at deep discounts, he said. SBC has lost nearly 3 million retail access lines year-to-date through August. Whitacre said the current regulatory structure has not changed with the times. Traditional phone service has competition from wireless and cable television. The fight against regulatory restrictions is not new at SBC. Whitacre has claimed regulations imposed on SBC were holding the company back -- especially since its archrivals, the cable companies, were not subject to the same restrictions. In October of last year, SBC scaled back its Project Pronto digital subscriber line initiative. The company has said that until the playing field is leveled in the contest with cable, aggressive DSL rollouts won't be profitable. Of the 11,000 jobs on the chopping block, roughly
9,000 will be eliminated in the fourth quarter, with the remaining
jobs to be cut early next year. One-third of the affected employees
will be in management positions. Prior to this announcement, SBC
has already reduced its staff by 10,000 this year. The company plans to reduce its capital expenditures to be in the range of $5 billion and $6 billion in 2003. SBC has a 2002 capital expenditure budget of just under $8 billion for this year. Related stories:
AT&T Broadband throws dial-up into the mix AT&T Broadband has teamed with PeoplePC to give its high-speed Internet access subscribers remote access nationwide via a dial-up connection. After paying a one-time registration fee of $10, cable modem subscribers will receive two hours of dial-up access each month. Additional time will be available for a fee. An extra 10 hours of dial-up access is available for $5.99 a month, while unlimited access costs $10.99 a month. The PeoplePC footprint includes more than 7,400 local dial-up access numbers. PeoplePC will provide technical support and billing services. RCN Corp. rolled out a similar service earlier this week to its cable modem subscribers. RCN customers will pay an additional $9.95 a month for the service. Related story:
• At Home bondholders file suit In a newly filed lawsuit, bankrupt At Home Corp. claims that Comcast Corp. and Cox Communications Inc. made improper profits from stock deals with AT&T, according to a SEC filing. The suit, filed by bondholders in the US District Court in Delaware, alleges that the companies used their insider status to "force" At Home into agreements that benefited them but left At Home "critically weakened." The suit is seeking at least $600 million for At Home and other unspecified damages related to breach of fiduciary duties. At Home filed for bankruptcy last year. • Rainmaker awarded sixth patent The US Patent and Trademark Office has awarded Rainmaker Technologies Inc. its sixth patent. The patent, dubbed Method and apparatus for signal transmission and reception, adds 35 new claims to Rainmaker's portfolio. The patent strengthens the company's intellectual property position for its SpreadTime modulation, according to the company. • NCTI develops marketing course Broadband communications trainer NCTI has developed a marketing course geared toward broadband professionals. The Introduction to Marketing course includes industry-specific case studies, workbook exercises and real-life situations that explore the buying habits of broadband customers.
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