08.09.2010 12:00 AM
Harmonic Swings to Profit on HD Demand
SUNNYVALE, CALIF.: Harmonic swung to a profit in the second
quarter on demand for high-definition equipment. The company reported net
income of $4.4 million on revenues of $95.5 million for the quarter ending July
2. Net loss for the year-ago period was $7.9 million on revenues of $81.3
million. Harmonic’s second-quarter bookings were $104 million, up 28 percent
from a year ago.
“Across our customer base, we’ve started to see a whole new encoder upgrade
cycle where our latest generation HD and standard-definition encoders are being
purchased to replace existing encoders, opening up bandwidth for new HD
channels in the process.” Harmonic’s Patrick Harshman said. “This replacement
cycle started to play out for us in the second quarter and will be a key
opportunity for us going forward.”
International sales represented nearly half of Harmonic’s net revenues; and
more than half were attributed to cable customers. Telco, broadcast and other
customers accounted for 17 percent of sales.
Non-GAAP net income was $9.1 million or 8 cents a share, exceeding analyst
expectations. Non-GAAP was calculated by excluding acquisition and severance
costs, among other items. Harmonic agreed in may to acquire Omneon for $190
million in cash plus 17.1 million shares of Harmonic stock at the May 5 closing
The deal is expected to close within the next few months. Harshman said 2011
manufacturing cost synergies of $8 million to $10 million had been identified
for the combined companies. He said more than 50 meetings had been held with
“There is no question that our customers are in agreement with our strategic
vision that the market is heading towards the convergence of video production,
play out and delivery,” he said.
Bookings for Omneon during the first six months of the year were $57.8 million,
up 19 percent year-over-year. Omneon is on track to generate full-year revenues
of $120 million to $125 million, up about 18 percent from 2009.
Harmonic is on track to generate full-year 2010 revenues of $370 million to
$375 million. It finished the second quarter with $188 million in cash and
equivalents, and long-term liabilities of nearly $67 million, compared to $152
million and $55 million as of Dec. 31, 2009.
Harmonic reported 2Q10 results July 29, boosting the stock (NASDAQ: HLIT) from
$5.97 to more than $7. Shares of Harmonic were trading this morning at $6.80,
up 7 percent year-to-date.
-- Deborah D. McAdams