SeaChange International higher, swings to Q3 profit
Shares of SeaChange International, Inc. (Nasdaq: SEAC) are rising on news after the close on Thursday that the provider of digital video systems and software swung to a profit in the third quarter of fiscal 2008.
Net income for the three months ended Oct. 31 was $3.3 million, or $0.11 per share, compared with a net loss of $1.2 million, or $0.04 per share, a year earlier. Analyst estimates were not available.
The Acton, Mass.-based company reported that revenues increased 16% to a record $49 million, from $42.3 million during the third quarter of fiscal 2007.
“We’re extremely delighted with our financial performance this quarter which includes record revenues, a bottom-line profit and cash generation,” said president and CEO Bill Styslinger in a statement.
Styslinger elaborated that he is happy that SeaChange’s third-quarter revenue was driven by continued demand for its video on demand (VOD) systems, particularly from North American cable customers.
The company, which had about 700 employees at the end of the previous fiscal year, sells its technology to Comcast Corp. (Nasdaq: CMCSA), Time Warner Inc. (NYSE: TWX), Cablevision Systems Corp. (Nasdaq: CVC), as well as to clients in Japan, the United Kingdom, South Korea and India.
“They’re expanding overseas, but the business is still largely driven by North American markets,” said Murray Aronsen, an equity analyst with investment bank Ferris Baker Watts, in a phone interview.
Looking ahead, CEO Styslinger said he expects SeaChange to profitable in the fourth quarter due to continued order strength in VOD systems from North American service providers and the residual benefits of cost reduction initiatives undertaken in the second quarter.
“The nature of the business is lumpy,” Aronsen explained. “But it looks like they will be profitable in the second half of fiscal 2008.”
Aronsen said that he is reiterating a “buy” rating on the stock and keeping a price target of $10.50.
At 1:39 p.m. ET, shares of SeaChange International (SEAC) had gained $1.98, or 36%, to $7.52. That’s still far from the 52-week high of $11.05, touched on Feb. 9. The 52-week low of $4.95 was established on Nov. 8.
