SeaChange plans more divestitures as it morphs into pure-play software provider

SeaChange International (Nasdaq: SEAC), which has gone through a tumultuous year, today reported fourth quarter revenue of $51.7 million and non-GAAP per share income of 18 cents, down from $57.9 million and 19 cents per share a year ago. The quarterly earnings exclude $2.4 million in revenue related to discontinued operations.

CEO Raghu Rau said the company would continue to morph itself into a pure-play software provider and said it was actively seeking buyers for other non-core segments of the company that don't fit into its long-term strategy.

The company posted a quarterly GAAP loss from continuing operations for the fourth quarter ending Jan. 31 with $3.5 million, compared with GAAP income from continuing operations of $11.2 million for the fourth quarter of fiscal 2011. SeaChange said restructuring cost the company some $3.1 million, primarily related to headcount reductions, and $1.8 million of earn-out expenses related to prior acquisitions. In comparison, the fourth quarter of 2011 saw a gain of $1.9 million on the sale of an affiliate.

SeaChange earlier this year sold its former broadcast servers and storage business while retaining its video streaming software and related hardware business.

Full-year revenues were $197.7 million, down from $201.7 million a year ago. Non-GAAP income from continuing operations was $16.4 million, or 51 cents a share, compared with non-GAAP income from continuing operations of $15.7 million, or 49 cents a share, for the same prior period a year ago.

CEO Raghu Rau said the fourth quarter showed promise and allowed the company to end the year on a positive note.

He said SeaChange would focus in 2013 on turning into "a pure-play software provider, lowering our overall cost structure, delivering industry leading, next generation solutions and achieving superior financial results."

He said that in addition to selling its broadcast servers and storage business, it was "actively engaged in the potential divested of other non-core assets that do not fit into our long-term business strategy."

SeaChange cut $5 million in annualized expenses earlier this year and cut opex as a result of its divestiture.

Rau said it expects "further operating expense reductions in the first half of this year."

"We will continue to invest significantly in research and development by moving investments from legacy to next generation products and building our intellectual property," he said. "In fiscal 2013, SeaChange will become a leaner and more agile company focused on bringing new products to market that deliver a competitive advantage to our service provider customers and drive increased value for our shareholders."

Rau forecast full year fiscal 2013 total revenues to be in the range of $188 million to $200 million, with software revenues to be in the range of $150 million to $160 million and media services revenues to be in the range of $38 million to $40 million.

He also said full year non-GAAP total operating income should be in the range of $19.5 million to $23.5 million, with the software segment accounting for $17 million to $20 million and media services segment accounting for $2.5 million to $3.5 million of this range. First quarter of fiscal 2013, he said, should see software revenues in the range of $35 million to $37 million taking into account certain product and market rationalization efforts, including exiting unprofitable products and markets, and media services revenues to be in the range of $7.8 million to $8.2 million.

SeaChange has reshuffled its executive ranks over the past year.

In December, after multiple quarters of inconsistent results as it struggled to find its sweet spot, the company's chief executive and founder Bill Styslinger, retired. It named Rau interim CEO.

In February, the company announced president and longtime SeaChange exec Yvette Kanouff, was leaving the company, saying it had no plans to replace her, part of an ongoing drive to cut costs.

"Over the past few months, Yvette has been discussing her desire to pursue other interests, and we support that and wish her well," said Rau in a statement.

The company earlier had announced job cuts as part of a $5 million cost-reduction plan.

For more:
- see this release

Related articles:
SeaChange set to offer Wi-Fi IPTV
SeaChange demos software for OTT strategies
SeaChange to sell broadcast server and storage business
SeaChange executive shuffle continues as Kanouff leaves presidency
SeaChange CEO out as company 'evaluates alternatives,' lowers Q3 outlook

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