Last trade after-hours was $6.65 on Island. Here are some notes from the call; I heard nothing but good things and continue to be v. impressed by Jack Bryant:
CCUR is now deploying VOD in 34 markets, with 5 of the top 7 MSOs.
19 of these markets are SFA-based, and 15 are MOT-based.
VOD and SVOD remain the #1 strategic priority for every cable operator in 2002.
The buy rates and subscriber retention benefits are supporting widescale VOD deployments by all the major MSOs.
Many of the major operators now have plans to offer on-demand capability for basic channels - this is another key step in the evolution of Everything on Demand model.
MSO Updates:
Time Warner - Moving forward aggressively - S/VOD in all major markets this year, CCUR has 3 out of top 4 markets. 5 new system deployments with CCUR in past quarter. Tampa Bay continues to represent the world's largest commercial VOD deployment. Add-on business from Oceanic, Tampa, and Houston in past quarter, more to come in this quarter, including new deployment commitments.
Cox - Launch in San Diego. EOD will be rolled out commercially in 8 markets by end of 3rd quarter. CCUR working with Cox also in Pheonix and Virginia, expect to play a big role in expanded VOD plans through the end of the year. "Free Zone" should drive strong VOD usage. CCUR plans to significantly expand their VOD footprint with Cox over next 2-3 quarters.
Charter - Very excited about new relationship. CCUR has already shipped and installed servers for a number of markets. Charter has announced plans to deploy VOD in 17 additional markets through the end of the year. Very visible and vocal proponent of VOD.
Comcast - Has now deployed commercially in all 9 of CCUR's cable markets. 7 are MOT, 2 are SFA. Comcast has firm plans to double their VOD footprint this year, and CCUR continues to expect to benefit from this.
AT&T - Remain pleased with progress - testing with Denver lab. With pending merger, probably won't move before end of year.
Adelphia - Continue to work closely - CCUR is positioning themselves and testing with their lab as well; remain optimistic.
Cablevision - Extremely well-positioned, and consistent with their publicly-stated multiple vendor VOD strategy, CCUR believes they will be given a shot to do commercial business this quarter.
Europe, Asia - Things look promising on multiple fronts, but more in the longer term, like late this calendar year and early the next.
Shipped new MediaHawk model 3000 into every one of their new VOD deployments in the past quarter. Doubled streaming capacity in the same footprint.
pVC / PVR - Continues to move forward - expect commercial market deployment opportunity at a top 7 MSO this quarter.
CCUR's momentum is stronger than ever, and competitive position and consistent operational execution remain unmatched. Very well-positioned to build on their leadership position as the company works on closing out a very successful fiscal 2002, and prepare to enter a very exciting fiscal 2003.
Q&A:
Q on nCUBE & NYC, and pricing since then: No public affirmation on the analyst note that nCUBE is positioned in NYC. With or without NYC at this point, CCUR's leadership at Time Warner is uncontested. Pricing is always competitive with each market opportunity and is not necessarily out of line with what they've been modeling consistently over the past few quarters. Price per stream as modeled is expected to go down over time and lower pricing is not a bad thing - will be a huge enabler for their customers to bring much broader and deeper deployments.
pVC moving from trial stage to field implementation this quarter and CCUR is excited about that opportunity.
On winning Charter: CCUR has been working with them for a long time, has been diligent and patient, and Diva's current financial condition certainly probably helped, but would like to think they were in a position to secure a piece of Charter's business regardless. Very excited and look forward to a long-term relationship with Charter.
VOD follow-on business was a little more than 20% of total VOD business in the past quarter. Expect this number to get much stronger as their VOD footprint continues to grow (i.e., look at 34 markets in a year from now). Provided foundation and stability for better visibility going forward. CCUR models their markets for this as the timing is fairly predictable as time progresses in a given site.
See VOD plus new SVOD and EOD offerings stimulating simultaneous usage rates steadily northwards.
On content: SVOD and basic channels being offered on-demand is very compelling. All of the major Hollywood studios have lined up and embraced the VOD model in support of the cable industry, which is why we see all of the MSOs aggressively rolling it out with 400-800 hours of content. The content issue continues to evolve and improve over time, and look for the release window to move nicely as VOD gets big in the coming years.
On competition: CCUR continues to be very strongly positioned, feels they have a superior hardware platform and much stronger integration capabilities, with proven ability to scale. nCUBE has to prove themselves with the one MSO they have.
Visibility: Visibility is as good as its ever been, guiding to higher numbers.
Linearity: DSOs are well in line with their target, pace of revenues through the quarter were pretty consistent, not back-loaded.
Any old inventory remaining? No, strong pace and increased momentum of business have kept inventory moving out.
Expect to have very large success with their own integrated QAM and up-converter offerings - offers nice advantages to the cable operator from numerous standpoints. They are well-positioned especially with MOT systems in this regard.
So where are now we in the "land grab" domestically? About a third of the way through... Some of those are "under construction," so to speak, so that's not a completely firm 30-35%. AT&T still has a long way to go, obviously.
Haven't seen any pullbacks in capital expenditures from cable operators this year. VOD is miniscule by comparison to everything else in the typical cable operator's overall budget, yet strategic benefits are overwhelming and far outweigh any capital spending issues. (Read: no-brainer.) CCUR has not at all seen any slowdown in VOD activity or momentum with any of the MSOs.
Total VOD server market size for North American cable operators in calendar 2002: $160 million.
When will we see broad-scale (vs. current selective) marketing of VOD by the MSOs? Comcast has been increasing it lately, and it depends largely on rollout progress in each local market. Thinks we'll see more MSOs turning up the heat and promoting the service much more aggressively as both operators and consumers get more comfortable with the technology in each market.
Usage rates flattening or dropping in mature markets? Haven't been seeing usage rates moderating, in point of fact they have been shipping additional capacity (for same footprint) into older markets like Oceanic and Tampa Bay, and as content continues to broaden this should increase even more. Could have set his watch as to when they were going to need additional streaming capacity in Tampa. As number of won markets increases, future revenue goes higher and gets more predictable. |
