IPO Underway: BigBand Network's Big Boost

Last Saturday, the "Wall Street Journal" reported that Google Inc. (Nasdaq: GOOG) is seeking to penetrate the cable television sector and take the lead in search services there too. According to the "Wall Street Journal," Google is already conducting trials of such a service, with the future goal of winning a significant chunk of the television advertising market, worth an estimated $54 billion a year; a market that is a lot bigger than the potential size of the one it has today on the Internet.

This new field of "customized television advertising" has an unknown Israeli angle to it too. The "Wall Street Journal" report said that Comcast Corp. (Nasdaq: CMCSA), the largest cable company in the U.S., is already conducting similar trials ahead of a commercial launch next year, and to this end, it has been using equipment manufactured by a number of small companies such as OpenTV Corp. (Nasdaq: OPTV) and others. These did not get a mention in the aforementioned article, but I know for certain that among the other providers of equipment to Comcast are Terayon Communication Systems Inc. (Pink Sheets: TERN.PK) and its Israeli rival BigBand Networks Inc., which is set to float this week on Nasdaq at a company value of $750 million.

OpenTV is partnering with Terayon in a field known as "Digital Ad Insertion" and following the completion of successful field trials, the two companies are set to launch a system in the near future. In the course of the trials, in which Comcast also took part, the system's performance was tested by integrating it in decoders made by two leading manufacturers, Motorola Corp. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO). I have no doubt that BigBand, which will be listed for trading under the symbol BBND, will be a big hit, not because of the aforementioned trials, which is an exciting development in its own right, but which will translate into revenue over the longer-term, but because James Cramer mentioned the company last week.

Cramer says that BigBand "is a play on the triple play," and that the midpoint of BigBand's price range right now is $11, whereas ordinarily, it would be priced higher. Plus, it is "growing faster than Cisco and is worth more than $14." BigBand's owners should send the man some flowers, since I believe his endorsement will up the company's price when the IPO gets underway later this week.

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.