Harmonic Reports Growth, Sells Stock
Anticipating major revenue opportunities ahead in the transition from SD to HD video, Harmonic reported significant sales and earnings growth in the third quarter of FY2007.
The Sunnyvale, Calif.-based maker of video processing equipment reported net sales of $82.3 million in the quarter ending Sept. 28, up 31 percent from the third quarter of 2006. For the first nine months of 2007, net sales were $223.8 million, up 30 percent over the same period of 2006.
Harmonic said the results included significant revenue from a growing number of satellite customers deploying an increasingly broad range of new products and solutions. In a conference call with analysts, a company officer said a “strong backlog and good sales momentum” portended good earnings results for over the next six months.
The company said its two largest customers in the quarter were Comcast (16 percent of Harmonic’s sales) and EchoStar (15 percent). Overall, cable customers accounted for 51 percent of the company’s revenue, with satellite providers contributing 32 percent and telcos and others comprising the remainder.
“We are very pleased with our strong sales and earnings growth, as well as our improved gross margins and operating efficiencies, for the third quarter and for the year-to-date,” said President and CEO Patrick Harshman. “We believe that we have increased our market share among domestic and international satellite operators, which has been driven by our powerful MPEG-4 AVC high-definition and standard-definition video encoders, as well as our new video processing, video-on-demand and network management solutions.”
The company anticipates growth in switched digital video, the technology that promises a major increase in channel capacity on cable systems. A company official told analysts that Harmonic’s SDV sales were essentially nonexistent in the last quarter, but it anticipates major sales related to Comcast’s SDV rollout in 2008.
“We still don’t see the deployments being in what I would call full swing [in the first quarter of 2008],” said a Harmonic officer.
But Harmonic is excited about sales related to the expansion of HD, noting that events such as DirecTV’s massive HD rollout are putting pressure on other providers to up their offerings.
In a separate announcement that Harmonic officers would not address in the call with analysts, the company said it will raise capital by selling 12,900,000 shares of stock. At about $11.50 a share, that would come to about $140 million.
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