BigBand Networks Reports Second Quarter 2008 Results

REDWOOD CITY, CA, Jul 31 (MARKET WIRE) --
BigBand Networks, Inc. (NASDAQ: BBND) today reported financial results
for the second quarter ended June 30, 2008.

For the second quarter of 2008, total revenues were $43.0 million as
compared to $39.9 million reported in the first quarter of 2008 and $54.5
million reported in the second quarter of 2007, which included $7.1
million from the subsequently retired CMTS platform.

GAAP net income for the second quarter of 2008 was $1.2 million, or $0.02
per diluted share. These results compare to a net loss of $1.9 million, or
$(0.03) per share, reported in the first quarter of 2008 and net income of
$1.7 million, or $0.02 per diluted share, reported in the second quarter
of 2007.

On a non-GAAP basis, the Company reported net income of $4.5 million, or
$0.07 per diluted share, in the second quarter of 2008. These numbers
exclude $2.4 million in stock-based compensation expense, $1.2 million in
restructuring expense and $143,000 in amortization of intangibles, offset
by a $287,000 benefit from the sale of CMTS platform inventory previously
reserved for in a prior period and $202,000 in income taxes. This compares
to non-GAAP net income of $1.4 million, or $0.02 per diluted share,
reported in the first quarter of 2008 and non-GAAP net income of $ 4.7
million, or $0.07 per diluted share, reported in the second quarter of
2007. The previous quarters' non-GAAP results also reflect adjustments for
stock-based compensation, amortization of intangibles, restructuring and
related tax expenses.

At June 30, 2008, deferred revenue was $69.2 million, up from $63.7
million at March 31, 2008 and $67.3 million as of December 31, 2007. The
Company ended the second quarter with $158.8 million in cash, cash
equivalents and marketable securities, compared to $150.0 million in the
prior quarter and $154.5 million at December 31, 2007.

"We are pleased to report another quarter of solid execution, continued
progress in leveraging our platform and building additional functionality
for new and existing customers," commented Amir Bassan-Eskenazi, president
and CEO of BigBand Networks. "The industry is shifting toward more High
Definition programming, and operators are retooling and enhancing their
networks. This trend continues to drive all areas of our business --
broadcast, Switched Digital Video and Telco TV solutions. We are
optimistic about the opportunity ahead and are well positioned to
leverage our technology know-how, customer relationships, and footprint."

In an effort to reduce its foreign currency exchange exposure going
forward, in the second quarter of 2008 the Company reduced foreign
currency based purchases and the related forward exchange contracts it
had in place. As a result of these changes, the Company recorded, in its
GAAP and non-GAAP results, a one-time derivative gain of $1.0 million,
which was reported in other income along with other foreign exchange
gains of approximately $400,000.

Third Quarter 2008 Business Outlook

For the third quarter of 2008, management provides the following outlook:

-- Net revenues are expected to be in the range of $46.0 to $48.0
million.
-- Gross margins are expected to be in the range of 54% to 57%.
-- GAAP operating expenses are expected to be in the range of $27.5 to
$28.0 million.
-- Non-GAAP operating expenses are expected to be in the range of $24.5
to $25.0 million.
-- GAAP net earnings per share is expected to be in the range of a loss
of $(0.02) to a profit of $0.01.
-- Non-GAAP net income per share is expected to be in the range of $0.02
to $0.05.

The following table presents our non-GAAP anticipated results for the
quarter ending September 30, 2008, reconciled to our GAAP anticipated
results. Our non-GAAP anticipated results exclude (i) amortization of
intangible assets, (ii) stock-based compensation and (iii) related
income
taxes.

Third quarter 2008
Estimated
Earnings per Share
----------------------------
Low High
------------- --------------
GAAP net (loss) income $ (0.02) $ 0.01
Amortization of intangibles and stock-based
compensation, net of taxes 0.04 0.04
------------- --------------
Non-GAAP net income $ 0.02 $ 0.05
============= ==============

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 that many investors feel may obscure our true operating
costs. 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, amortization of intangible assets or
preferred stock warrant expenses, which are non-cash charges, as well as
restructuring charges in managing its operations. Specifically, management
does not consider stock-based compensation expense when developing and
monitoring our budgets and spending. The economic substance behind our
decision to exclude preferred stock warrant expense, stock-based
compensation and amortization of intangible assets relates to these
charges being non-cash in nature and restructuring being one time
charges. As a result, we use calculations of non-GAAP operating income,
net income, net income per share and gross margin, which exclude, net of
tax, amortization of intangible assets, stock-based compensation and
restructuring charges, to evaluate our ongoing operations and to allocate
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 to have a better
understanding of the overall performance of our ongoing business
operations and its performance 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 July 31, 2008

BigBand Networks will host a corresponding conference call and live
webcast at 2:00 p.m. Pacific Standard Time today. To access the
conference call, dial +1-800-218-0713 for the U.S. or Canada and
+1-303-262-2125 for international callers. The webcast will be available
live on the Investor Relations section of the Company's corporate website
at www.bigbandnet.com 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 Daylight Time on Thursday July 31, 2008 until 11:59 p.m. Pacific
Daylight Time on August 7, 2008, by dialing +1-800-405-2236 or
+1-303-590-3000 for callers outside the U.S. and Canada, and entering
pass code 11116592#.

Cautionary Statement

The statements in this release regarding our business outlook with respect
to the quarter ending September 30, 2008 (including revenues, gross
margins, operating expenses and GAAP and non-GAAP earnings 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; 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 2007 and Report on Form 10-Q
for the quarter ended March 31, 2008. You can obtain copies of the reports
on the SEC's Web site (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 July 31, 2008 press release,
or to reflect the occurrence of unanticipated events.

About BigBand Networks

BigBand Networks, Inc. (NASDAQ: BBND) provides broadband 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 of video, voice and data across a wide range of services,
including digital TV, high definition TV, addressable advertising,
video-on-demand, interactive TV, Internet TV, video telephony, high-speed
Internet and voice-over-IP. BigBand Networks' customers include more than
100 service providers -- including six of the ten largest service
providers in the U.S. -- and leading cable and telco service providers in
North America, Asia, Europe and Latin America. 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, Inc.
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)

As of
As of June 30, December 31,
2008 2007
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 50,854 $ 55,162
Marketable securities 107,915 99,358
-------------- --------------
Total cash, cash equivalents and marketable
securities 158,769 154,520
Trade receivables, net 25,195 27,855
Inventories, net 8,242 6,832
Prepaid expenses and other current assets 5,414 4,012
-------------- --------------
Total current assets 197,620 193,219

Property and equipment, net 17,193 17,432
Goodwill and other intangible assets, net 2,104 2,390
Other non-current assets 6,230 5,545
-------------- --------------
Total assets $ 223,147 $ 218,586
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,532 $ 13,811
Accrued compensation and related benefits 9,450 6,475
Current portion of deferred revenues, net 49,395 48,256
Accrued warranty 2,944 3,502
Other current liabilities 7,006 11,879
-------------- --------------
Total current liabilities 78,327 83,923

Deferred revenues, net, less current
portion 19,804 19,032
Accrued warranty, less current portion 1,085 857
Accrued long-term severance pay fund 4,005 3,188

Stockholders' equity:
Common stock 64 62
Additional paid-in capital 257,518 248,139
Deferred stock-based compensation (65) (203)
Accumulated other comprehensive (loss)
income (258) 248
Accumulated deficit (137,333) (136,660)
-------------- --------------
Total stockholders' equity 119,926 111,586
-------------- --------------
Total liabilities and stockholders' equity $ 223,147 $ 218,586
============== ==============

BigBand Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts, Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------

Net revenues:
Products $ 33,888 $ 46,261 $ 65,851 $ 91,917
Services 9,123 8,202 17,066 15,380
-------- -------- -------- --------
Total net revenues 43,011 54,463 82,917 107,297

Cost of net revenues:
Products 14,353 21,761 26,678 40,829
Services 3,285 3,611 6,499 6,981
-------- -------- -------- --------
Total cost of net revenues 17,638 25,372 33,177 47,810
-------- -------- -------- --------
Gross profit 25,373 29,091 49,740 59,487
-------- -------- -------- --------

Operating expenses:
Research and development 12,809 13,678 27,212 26,750
Sales and marketing 7,002 11,113 14,866 21,427
General and administrative 5,360 4,115 10,188 7,637
Restructuring charges 1,158 - 1,493 -
Amortization of intangible
assets 143 143 286 286
-------- -------- -------- --------
Total operating expenses 26,472 29,049 54,045 56,100
-------- -------- -------- --------

Operating (loss) income (1,099) 42 (4,305) 3,387
Interest income 1,202 2,157 2,871 3,038
Interest expense - (271) - (609)
Other income (expense), net 1,365 105 1,447 (4,997)
-------- -------- -------- --------
Net income before provision for
income taxes 1,468 2,033 13 819
Provision for income taxes 221 378 686 141
-------- -------- -------- --------
Net income (loss) $ 1,247 $ 1,655 $ (673) $ 678
======== ======== ======== ========

Basic net income (loss) per common
share $ 0.02 $ 0.03 $ (0.01) $ 0.02
======== ======== ======== ========
Diluted net income (loss) per
common share $ 0.02 $ 0.02 $ (0.01) $ 0.01
======== ======== ======== ========

Shares used in computing GAAP basic
net income (loss) per common share 63,400 58,140 62,898 38,373
======== ======== ======== ========
Shares used in computing GAAP
diluted net income (loss) per
common share 67,548 70,764 62,898 66,725
======== ======== ======== ========

BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts, Unaudited)

Three Months Ended June 30, 2008
---------------------------------------------
Stock-based
Comp/Amorti-
zation of
GAAP Intangible Realignment Non-GAAP
Results Assets Expenses Results
-------- ------------ ----------- ---------

Net revenues:
Products $ 33,888 $ - $ - $ 33,888
Services 9,123 - - 9,123
-------- ------------ ----------- ---------
Total net revenues 43,011 - - 43,011
-------- ------------ ----------- ---------

Cost of net revenues:
Products 14,353 (268) 287 14,372
Services 3,285 (167) - 3,118
-------- ------------ ----------- ---------
Total cost of net revenues 17,638 (435) 287 17,490
-------- ------------ ----------- ---------
Gross profit 25,373 435 (287) 25,521
-------- ------------ ----------- ---------

Operating expenses:
Research and development 12,809 (636) - 12,173
Sales and marketing 7,002 (529) - 6,473
General and
administrative 5,360 (837) - 4,523
Restructuring charges 1,158 - (1,158) -
Amortization of intangible
assets 143 (143) - -
-------- ------------ ----------- ---------
Total operating expenses 26,472 (2,145) (1,158) 23,169
-------- ------------ ----------- ---------

Operating (loss) income (1,099) 2,580 871 2,352
Interest income 1,202 - - 1,202
Interest expense - - - -
Other income, net 1,365 - - 1,365
-------- ------------ ----------- ---------
Net income before provision
for income taxes 1,468 2,580 871 4,919
Provision for income taxes 221 202 - 423
-------- ------------ ----------- ---------
Net income $ 1,247 $ 2,378 $ 871 $ 4,496
======== ============ =========== =========

Basic net income per common
share $ 0.02 $ 0.07
======== =========
Diluted net income per
common share $ 0.02 $ 0.07
======== =========

Shares used in computing
basic net income per common
share 63,400 63,400
======== =========
Shares used in computing
diluted net income per
common share 67,548 67,548
======== =========

BigBand Networks, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages, Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
--------- --------- --------- ---------

GAAP and Non-GAAP net revenues
as reported $ 43,011 $ 54,463 $ 82,917 $ 107,297
--------- --------- --------- ---------

GAAP cost of net revenues as
reported $ 17,638 $ 25,372 $ 33,177 $ 47,810
Inventory recovery relating
to CMTS platform 287 - 755 -
Stock-based compensation
expense (435) (426) (889) (699)
--------- --------- --------- ---------
Non-GAAP cost of net revenues $ 17,490 $ 24,946 $ 33,043 $ 47,111
--------- --------- --------- ---------

GAAP gross profit as reported $ 25,373 $ 29,091 $ 49,740 $ 59,487
Inventory recovery relating
to CMTS platform (287) - (755) -
Stock-based compensation
expense 435 426 889 699
--------- --------- --------- ---------
Non-GAAP gross profit $ 25,521 $ 29,517 $ 49,874 $ 60,186
--------- --------- --------- ---------

As a percentage of net
revenues:
GAAP gross profit as reported 59.0% 53.4% 60.0% 55.4%
========= ========= ========= =========
Non-GAAP gross profit 59.3% 54.2% 60.1% 56.1%
========= ========= ========= =========

GAAP operating (loss) income as
reported $ (1,099) $ 42 $ (4,305) $ 3,387
Inventory recovery relating
to CMTS platform (287) - (755) -
Stock-based compensation
expense:
- Cost of goods sold 435 426 889 699
- Research and development 636 1,058 1,895 1,731
- Sales and marketing 529 1,037 1,248 2,189
- General and
administrative 837 427 1,631 741
Restructuring charges 1,158 - 1,493 -
Amortization of intangible
assets 143 143 286 286
--------- --------- --------- ---------
Non-GAAP operating income $ 2,352 $ 3,133 $ 2,382 $ 9,033
--------- --------- --------- ---------

GAAP net income (loss) as
reported $ 1,247 $ 1,655 $ (673) $ 678
Stock-based compensation
expense 2,437 2,948 5,663 5,360
Amortization of intangible
assets 143 143 286 286
Inventory recovery relating
to CMTS platform (287) - (755) -
Restructuring expenses 1,158 - 1,493 -
Preferred stock warrant
expense - - - 4,974
Tax effect of adjustments (202) (34) (107) (778)
--------- --------- --------- ---------
Non-GAAP net income $ 4,496 $ 4,712 $ 5,907 $ 10,520
========= ========= ========= =========

Basic Non-GAAP net income per
common share $ 0.07 $ 0.08 $ 0.09 $ 0.27
========= ========= ========= =========
Diluted Non-GAAP net income per
common share $ 0.07 $ 0.07 $ 0.09 $ 0.16
========= ========= ========= =========

Shares used in computing Basic
Non-GAAP net income per common
share 63,400 58,140 62,898 38,373
========= ========= ========= =========

Shares used in computing
Diluted Non-GAAP net income
per common share 67,548 70,764 67,254 66,725
========= ========= ========= =========

Investor Relations:
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+1.415.217.5864
Email Contact

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