Concurrent VOD business hits approval cycle snag

(Telephony) Concurrent Computer Corp.'s next-generation video-on-demand business hit a last-generation snag late last year when an order for three new VOD systems was delayed in customer approvals.

The company announced the problem Dec. 27 and saw its stock drop 49.6% to $3.94. It has since improved to $5.69, and the order is expected to come through in the first quarter of this year, said Jack Bryant, Concurrent's president/CEO in a conference call today with investors.

"This customer gave us every assurance right up to the Christmas holiday that we would be in a position to ship these orders by the end of the calendar year," Bryant said. "The orders got tied up in an approval process and have been delayed until this quarter. The customer has given us repeated assurance that these orders will ship in the third quarter."

This type of problem has recurred throughout cable history as local systems and corporate managers grapple with technologies and finances.

"The purchase requisitions were pulled together and approved at the local level. Corporate approved the capital spending from a budget perspective and the physical paperwork was submitted from the three local systems to corporate headquarters, and from a timing perspective got fouled up in the approval process," Bryant recalled.

The approval process, he said, "was a little bit broader and deeper than anticipated."

It put a kink in Bryant's holiday.

"I was in conversations with this particular customer from my home on the Saturday before Christmas and found out that the day after Christmas that there appeared there was a pretty high probability that the paperwork was not going to get pushed through," he said.

Concurrent also suffers from another vendor-related problem when dealing with cable MSOs: customers' reticence to discuss technology deployments before they happen.

"The customers are very, very guarded about showing their hand at the local level too far in advance of the service being available to the local subscribers to better manage local market expectations," Bryant said.

Once launched, though, "customers are talking very bullishly on VOD," he said.

On a more positive note, Concurrent said that Time Warner Cable was expanding its Central Florida VOD launch into Pinellas County, bringing the regional service to a potential base of 130,000 subscribers.

"This is the industry's largest video-on-demand deployment in a single system and we believe exceeds the total U.S. installed base claimed by any of the other video-on-demand server vendors," Bryant said.