Big Band Networks (BBND) had a bad quarter. The provider of infrastructure for moving video around the internet lost 20% of its value after hours down to $11. It announced a modest $54.5 million in revenue and earnings $.07 a share. An IPO this year, Big Band is now off from a high of $21.63.
LimeLight (LLNW), a content delivery network that competes with industry leader Akamai (AKAM), is off from $24.33 just after its IPO to $16.54. Akamai’s stock is down 35% this year. It earnings disappointed investors.
In a related part of the internet infrastructure, Level 3 (LVLT) came up with flat revenue and lackluster earnings for the last quarter. Its shares went from $6.42 to $4.93 after its announcement. It has recovered a bit since then.
But, there is a trend here. The companies that provide the pipes and pipe parts to get video around the internet should be doing very well during the "YouTube" generation. They are not.
Two things may be happening. The first is the the service providers are in such fierce competition for business in a market that Wall St. views as hot that margins are being compressd by price cuts. The other possibility is that, after two years of extremely rapid expansion, video streaming and consumption is flattening.
Neither set of circumstances is good for these business, and neither is likely to go away.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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