SeaChange International (SEAC) Changes into Less Profitable Company

Jacob Harper |

“Transformative multi-screen video service” provider SeaChange International (SEAC) reported 2014 third fiscal quarter earnings after the bell on Dec. 5, and the company posted less than expected revenue and earnings, and significantly lowered guidance, which sent the company’s shares into a downward spiral.

Lack of Demand Appears to Limit SEAC's Potential

Founded in 1993, SeaChange claims to provide “world-class services” to bridge the gap between video, mobile, and the internet. While the multifaceted business model has served the company well in the past, SeaChange has struggled for some time to live up to their name.

After touching $70 a share during the tech bubble in the late 90s, SeaChange had lingered under $10 for most of thee aughts. Despite a major uptick in September fueled by strong second quarter earnings and a bevy of bullish analyst reports, those gains were largely erased in the aftermath of the dismal third quarter report.

Though SeaChange's business model appears to be at the forefront of tech, merging disparate platforms and providing multi-interface solutions, consumer demand does not appear to be matching the company's promise.

SEAC Q3 Earnings, Guidance Disappoint Street

For their 2014 third fiscal quarter earnings report, SeaChange reported a net gain of $2.9 million, or $0.09 per share, identical to the net gain of $2.9 million, or $0.09 per share, from the same period a year ago. Revenue for the quarter was $37.77 million, as compared to $39.2 million from the same quarter the previous year. Analysts were expecting a net gain of $0.14 per share on revenues of $41.8 million.

More than the disappointing earnings and revenue, however, investors seemed most upset after SeaChange’s conference call with investors. In the call, CFO Anthony Dias revealed EPS estimates for the fourth fiscal quarter were between 15 and 20 cents a share, “growth (that) is more moderate than prior expectations,” and was below analyst expectations.

SeaChange’s stock plummeted on the pessimistic forecast. Shares fell 15.76 percent on midday to hit $12.13 a share. The stock fell some 13 percent in extended trading after the results.

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Companies

Symbol Name Price Change % Volume
SEAC SeaChange International Inc. 2.66 0.08 3.10 107,972
DSUS Drone Services USA 0.00 0.00 20.00 385

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