Entropic Pivots for Future Broadcasting Tech Amidst Revenue Decline
[Via Satellite 02-06-2014] The expected uptick in ultra-HD (or 4K) technology and the transition to digital channel stacking switch (CSS) solutions were noted as drivers for Entropic Communications’ expected growth in the latter half of 2014 and into 2015. The focus on these upcoming changes were highlighted in Entropic’s recent earnings call, where declines in revenue were attributed to lower sales of legacy products and the shifting desire of operators to support 4K with High Efficiency Video Coding (HEVC) as well as HDTV.
“Operators continue to evolve their deployment plans as they work through the specifics of their IP-enabled offering,” said Patrick Henry, president and CEO of Entropic. “[This] will continue to challenge our ability to predict the timing and magnitude of some of our design win deployments. We do, however, continue to win designs from major service providers that we expect will launch in the second half of this year. Although we’re not able to discuss specific details of these design wins yet, we do expect that it will contribute materially to revenue in the second half of 2014 and into 2015.”
Net revenue for Entropic’s fiscal year 2013 was $259.4 million, down from $321.7 million at the end of FY2012. Fourth quarter revenue was up 3 percent from the previous quarter, to $57.9 million. These results for Q4 were “largely as expected” according to Henry, who also said Q1 topline revenue would be down 4 percent sequentially due to “declines in legacy Systems on a Chip (SoC) and MoCa discrete business, as well as typical Q1 seasonal softness for some of our run rate products that are not yet being fully offset by new device deployments.”
The company expects the growing demand for ultra-HD to boost sales during the second half of 2014 and into the following years. Pursuing trends in an unequable market, Entropic is sampling its first integrated MoCa product this quarter to prepare for this demand.
“Our initial investment to develop and commercialize an integrated product is culminating this quarter as we sample our first 28-nanometer integrated set-top box SoC with integrated MoCa 2, HEVC decoding and full band capture front end capabilities,” said Henry. “This first product will serve as a platform that will drive additional derivative products to address the growing market opportunities in both satellite and cable in North America and globally.”
Entropic also released the first digital CSS solution for direct broadcast satellite outdoor units (DBS ODU), which it sees as another area of growth in coming years. Most current sales remain with analog CSS equipment, and Entropic noted sales during the quarter to Sky in the United Kingdom and Ireland, as well as Inverto in India. Nonetheless, DirecTV has begun to deploy digital CSS technology with a primary focus on multiple dwelling units and hospitality properties.
“The overall DBS ODU market is expected to transition from analog to digital CSS over the coming years,” said Henry. “The vast majority of what will be deployed in 2014 will continue to be analog CSS as we understand it. As we get into second-generation digital CSS, we’ll see that deploying in 2015, and we believe we’re in a very strong position to have significant market share in that business. And really, the volume portion of that, we believe, is really second half of 2015.”