Archive for October, 2011

Harmonic Reports Strong Q3 2011 Results, Driven by Strong Performance in Americas

broadcast technology market research, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Oct 31 2011

Harmonic announced that its net revenue for the third quarter of 2011 was $138.9m, up from $104.8m in the third quarter of 2010.

Including a $26.6m contribution from Omneon, which Harmonic acquired last year, the company’s revenue was up 7% versus the same period a year ago, and up 4% when compared to the previous quarter.

The results, which were above the $134.7m expected by equity analysts and at the top end of Harmonic’s previously issued earnings guidance of $130m-$140m, sent the company’s share up by more than 10% on the day after their release.

GAAP net income for the quarter was $3.5m, compared to net loss of $400,000 in the third quarter of 2010, and net income of $400,000 last quarter. On a non-GAAP basis, net income for the quarter was $12.7m, compared to non-GAAP income of $9.m for the same period of 2010, and non-GAAP net income of $10.5m last quarter.

GAAP gross margins in the quarter were 46%, up from 45% last year, and flat with the previous quarter. Operating margins were 3%, up from 2% last year and up from 1% last quarter.

On a non-GAAP basis, gross margins were 51% for the quarter, compared to 49% last year and 51% last quarter. Non-GAAP operating margins were 12%, compared to 12% last year and 13% last quarter.

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Omneon Revenue

Revenue from Omneon product sales were $26.6m during the quarter, an increase of 2.3% versus the same quarter a year ago, and an increase of 4% increase versus the previous quarter.  Omneon’s service revenue was not disclosed by the company, but Harmonic management has indicated previously that Omneon’s service revenues are approximately 15% of its product sales.

On the company’s conference call with equity analysts, Harmonic CEO Patrick Harshman said “While Omneon acquisition has been a very successful catalyst of [our] strong overall growth with leading broadcasters and media companies, growth of our Production and Playout products from Omneon is progressing more modestly than anticipated. Production Playout product revenue was up 2% from the third quarter of 2010 and 5% from last quarter. However, we have made good progress and our new media storage products in particular are performing quite well.”

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Business Outlook

Harmonic say it expects is net revenue for the 4th quarter of 2011 to be in the range of $135m to $145m for the fourth quarter of 2011.

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“During the third quarter, we were pleased to see our domestic business rebound, up 24% from the previous quarter,” said Harshman.  “For the first nine months of 2011, our video processing revenue grew 23% from the same period last year. During the third quarter, we built on this momentum by introducing powerful new video products that will enable our global customers to move forward on a range of new Internet, multiscreen and traditional video services. We remain focused on further capitalizing on our broad technological and market leadership and profitably growing our business.”

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Related Content:

Press Release: Harmonic Announces Third Quarter 2011 Results

Harmonic Q3 2100 Analyst Conference Call Transcript

Harmonic Q3 2011 Presentation to Analysts

Previous Quarter: Harmonic Q2 2011 Revenues Falls Short of Estimates

Previous Year: Harmonic Announces Q3 2011 Results, Provides Detailed Omneon Update and Q4 Guidance

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Avid Posts $8 Million Net Loss for Q3 2011, Announces 10 Percent Workforce Reduction

Broadcast technology vendor financials | Posted by Joe Zaller
Oct 28 2011

Avid announced that its revenue for the first quarter of 2011 was $165m, flat versus the same period a year ago, and up 2% compared to the previous quarter. The revenue number came in slightly below the $165.3m that was expected by equity analysts.

The company posted a GAAP net loss of $8m for the quarter versus a GAAP net loss of $10m during the same period a year ago, and a GAAP net loss of $12.9m last quarter.

On a non-GAAP basis, the company posted a net profit of $385,000 for the quarter, compared to a non-GAAP net income of $1.6m last year
and a non-GAAP net loss of $3.9m last quarter.

As with the previous quarter, the company attributed its performance to softness in the European market, saying that the macro-economic situation in the region remains very fragile.  Avid chairman and CEO Gary Greenfield said that European broadcast customers clearly want to make changes, and the company is making strong progress in the region.  However these customers are still holding back from placing orders.  Nevertheless, despite the lower year-over-year revenue from EMEA, orders in region actually increased during the quarter.

Commenting on other regions, Greenfield said Avid had a strong quarter in the Americas and Asia-Pac regions.  The company also reported an increase in services revenue.

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Company restructuring announced – including 10% staff reduction

On the company’s earnings conference call with equity analyst, Greenfield outlined restructuring actions that the company says it is taking to re-align its cost structure and to accelerate its objective of expanding the company’s operating margins.

These actions were also announced as part of a form 8-K filing with the Securities and Exchange Commission.

As part of this restructuring, Avid is planning to reduce its headcount by approximately 10%, with the majority of the reduction expected immediately.  The company said will also close a facility in Irwindale, CA.

At the end of the third quarter, Avid had 1944 employees and 505 contractors, so the planned layoffs will impact approximately 200 staff.

“We believe that Avid should be able to achieve non-GAAP operating margins in the mid teens,” said Greenfield.  “While this profit level will require revenue growth, we continue to take actions to streamline and improve our operations while increasing our investments in areas of the business with higher growth potential.”

“These actions allow us to continue to invest in our core business as well as shift some resources to areas of the business that we believe offer better revenue growth for the company.”

Greenfield says the anticipated cost of this restructuring is approximately $10m-$11m, and will result in an annualized cost savings of approximately $25m-$30m.

On the company’s earnings call, Greenfield said the cuts were made across the board, with the exception of sales and marketing where the company continues to invest.

This is the second set of major layoffs at Avid in the past year. In December of 2010, Avid announced that it planned to restructure its operations during the first half of 2011 by eliminating positions “in lower growth geographies and markets,” while reinvesting in “more strategic areas with greater opportunity for growth.”

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Highlights for the third quarter:

  • Video revenue in the quarter was $98.4m, a decrease of2% versus the same period a year ago, and an increase of 2% versus the previous quarter.  Video revenue accounted for 60% of the total revenue during the quarter, versus 60% last quarter.

 

  • Audio revenue in the quarter was $66.5, up 3% versus the same period a year ago, and up 2% versus the previous quarter.

 

  • Revenue from products was $131.9m, a decrease of 2% versus the same period a year ago, and up 2% versus the previous quarter.  Product revenue accounted for 80% of the total revenue during the quarter, the same as last quarter.

 

  • Service revenue in the quarter was $33.1m, an increase of 7% versus last year, and an increase of 3% versus the previous quarter.

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Year-to-date performance:

For the first nine months of 2011, Avid’s revenue was $492.6m, an increase of 2% versus the same period in 2010.  The GAAP net loss for
the first nine months of 2011 was $20.6m, compared to a GAAP net loss of $31.4m for the same period in 2010.  On a non-GAAP basis, the company’s net loss for the first nine months of 2011 was $4.4m, compared to a non-GAAP net loss of $5m for the first half of 2010.

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Full year guidance lowered

Due to what Avid CFO Ken Sexton called a challenging macro environment remains the company lowered its financial guidance.  Sexton said the company is expecting full year revenue to be in the range of $665m-$675m with a non-GAAP operating profit margin of 1.5% – 3% of revenue.  Sexton also said that the company expects to achieve a year-on-year improvement in non-GAAP gross margins.

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“The third quarter results showed sequential improvement in revenue and profit,” said Greenfield. “We continue our sharp focus on providing our customers with the products and solutions that help them succeed. In addition, we have taken actions which should accelerate improvement in our financial performance.”

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Related Content:

Press Release: Avid Announces Results for Third Quarter 2011

Avid 8K Filing Detailing Plans for Restructuring

Previous Qtr: Avid Announces Disappointing Q2 2011 Results

Previous Avid Layoffs Avid to Cut Jobs, Close Some Facilities During First Half of 2011

Previous Year: Avid Losses Narrow as Company Posts “Strongest Financial Quarter Since 2007”

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Harris Reports Q1 2012 Results, Says Broadcast Revenue Increasing

Broadcast technology vendor financials | Posted by Joe Zaller
Oct 27 2011

Harris Corporation reported results for the first quarter of its 2012 fiscal year.

The company’s broadcast division is now part its Integrated Network Solutions (INS) unit, which was created when Harris strategically realigned its business segments in March of 2011, so the company no longer breaks out the specifics of its broadcast business.

Thus the information provided by the company about the broadcast business was scant compared to past earnings announcements.

Here’s what they did say:

Harris Corp. chairman and CEO Howard Lance said that the broadcast division it continues to see revenue growth in international regions: the South America, Middle East and Asia. In the company’s earnings presentation Harris said that broadcast was continuing to benefit from international demand.

Significant broadcast orders during the quarter, included $3 million from TV Azteca for the first live 3D transmissions throughout Mexico.

Harris also said it received a $3 million order from Svyaz Engineering, the company’s Russian manufacturing partner, with which it will begin local production of digital television transmitters. According to Harris, Russia is currently in the initial stages of its transition from analog to digital, and will this will ultimately include the replacement of 22,000 transmitters across the country. The Russian digital transition will take place over the next several years, and Harris believes it is well positioned to participate significantly in this revenue opportunity.

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Broadcast Business Impacted by Flooding in Thailand

On the conference call with equity analysts, Lance said the company “recently learned that one of our contract manufacturers located in Thailand has been impacted by the recent flooding. It’s really too soon for us to understand the extent of the impact and what impact it might have on the second quarter results in broadcast. We’re working feverishly to mitigate any impact. All of our finished goods have been moved out of Thailand, and our suppliers in the process of moving production and starting it at an alternate location.”

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Related Content:

Press Release: Harris Corporation Reports Fiscal 2012 First Quarter Results and Significantly Higher Orders

Harris Corporation Q1 FY 2012 Conference Call Transcript

Harris Corporation Q1 FY 2012 Earnings Call Presentation

Harris Corporation Strategically Realigns Business Segments; Broadcast Communications Rolled into New “Integrated Network Solutions” Unit

Previous Quarter: Harris Broadcast Division Posts Strong Growth in Q4 2011, Returns to Profitability for Quarter and Full Year

Previous Year: Harris Broadcast Division Reports $9m Loss on Rising Orders for First Quarter of 2011 Fiscal Year

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Avid To Cut Workforce by 10%, Close Facility, Take Q4 Charge of $10m-11m

Broadcast technology vendor financials | Posted by Joe Zaller
Oct 27 2011

Avid announced today that it has undertaken restructuring activities that include company-wide staff reductions of approximately 10%.  The company anticipates that it will complete the restructuring during the first half of 2012. Avid says it will also close a facility in Irwindale, CA

As part of this action, Avid will take a charge of approximately $10-11m for the layoffs, most of which will be realized in the quarter ending December 31, 2011.

On a conference call with equity analysts, Avid CEO Gary Greenfield said the cuts were made across the board, with the exception of  sales and marketing where the company continues to invest.

This is the second set of major layoffs at Avid in the past year.  In December of 2010, Avid announced that it planned to restructure its operations during the first half of 2011 by eliminating positions “in lower growth geographies and markets,” while reinvesting in “more strategic areas with greater opportunity for growth.”

 

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Related Content:

 Avid to Cut Jobs, Close Some Facilities During First Half of 2011

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Ranking Broadcast Technology Vendors Part 4 – the 2011 BBS Broadcast Technology Vendor Innovation League Table

broadcast industry technology trends, broadcast technology market research, Broadcast Vendor Brand Research, Top Broadcast Vendor Brands | Posted by Joe Zaller
Oct 25 2011

This is the seventh in a series of articles about some of the findings from the 2011 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands.  More than 8,000 people in 100+ countries took part in the 2011 BBS, making it the largest and most comprehensive market study ever done in the broadcast industry.

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Each year, as part of the Big Broadcast Survey (BBS), we ask broadcast professionals worldwide to rank a variety of technology vendor brands on a wide range of metrics.  We use this information to create a series of reports, which through benchmarking and industry “league tables” enable each vendors to understand its position in the market relative to their the industry as a whole as well as their direct competitors.

In previous articles we wrote about the 2011 BBS Overall Brand Opinion League Table, the 2011 BBS Net Change in Overall Opinion League Table, and the 2011 BBS Brand Opinion Leaders League Table.

This post looks at one of the most important metrics for any technology company – innovation.

The product side of the film & broadcast industry is driven by technology and innovation.  All vendors spend heavily on research and development in order to create advanced technologies that make their products stand out from the competition.  Thus innovation is a very  important component of the brand image and reputation of vendors in this space.

To find out which broadcast technology vendors are considered to be most highly regarded in terms of innovation, respondents were asked to rank broadcast technology vendor brands for “Innovation” on a scale of 1-10 – with 10 being best in the market, and 1 being worst in the market.  The top 30 ranked brands for innovation are shown below for the global sample of all respondents.

Please note that these results are shown in alphabetical order, NOT in the order in which they were ranked in the study. 

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2011 BBS Innovation League Table:

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There are a wide variety of companies on this list, including large and small firms; single product and multi-product firms; global and regional players; and audio and video technology providers.

Let’s look specifically at the how these companies and their products were ranked in the 2011 BBS, beginning with products and technology.

As shown in the chart below, these companies make products in 23 of the 26 product categories that we covered in the 2011 BBS.

The top products for brand leaders are split between audio and video – with microphones, signal processing and video transport each appearing five times.

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2011 BBS Innovation League Table — Frequency of Product Categories:

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The 2011 BBS Innovation League Table is split fairly evenly between audio and video companies.  There’s also a healthy mix of hardware versus software products represented on this list.

Does company size play a role in innovation?  Larger companies offer more products and are consequently used in more places than their smaller counterparts.  But this does not necessarily translate into innovation.

As shown below, innovative products are produced by both small focused companies, as well as by larger multi-product vendors.

Let’s look at the number of product categories that each of these brands produces (as defined by the segmentation used in the 2011 BBS).

The table below shows the number of 2011 BBS product categories produced by each brand.

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2011 BBS Innovation League Table — Number of 2011 BBS Product Categories per Brand:

 

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As shown in the table above, vendors producing products in only one 2011 BBS category account for more than half of the vendors in the top 30 innovation list.  This suggests that focused companies who apply their efforts to specialist product areas are often able to generate more innovation in the eyes of the market.

At the same time, larger companies are also represented on this list of the broadcast industry’s top innovators.  For example, Grass Valley is covered in 8 product categories in the 2011 BBS, while both Evertz and Snell are covered in five product categories.  These are examples of larger companies who have managed to instill innovation across their product lines.

Of course, companies are listed here based on how many 2011 BBS product categories they produce, which is not an absolute measure of the products produced be each vendor. There are some very large companies on the list above who appear in just one 2011 BBS category. In total, the 2011 BBS looked at 118 vendors in 26 separate product categories (based on the IABM’s industry model), but even so it did not necessarily cover the entire product range of all vendors.

Please keep in mind when reviewing this information that all data these charts are presented in alphabetical order, not in the order brands were ranked by respondents to the 2011 BBS.  Also, the charts in this posting measure the responses of all non-vendor participants in the 2011 BBS respondents, regardless of their company type, company size, geographic location, job title and budget for broadcast technology products.  Finally please note that this study evaluated a total of 118 brands.

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In order to get full value from this data, it is necessary to evaluate these results on a granular basis.  If you would like more information, please contact Devoncroft Partners.

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This article is based on the findings from the 2011 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 8,000 people in 100+ countries participating, the 2011 BBS is the largest and most comprehensive market study ever done in the broadcast industry.

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Devoncroft Partners has published a variety of reports from 2011 BBS data.  For more information, please get in touch.

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Related Content:

Ranking Broadcast Technology Vendors Part 3 – the 2011 BBS Brand Opinion Leaders League Table

Ranking Broadcast Technology Vendors Part 2 – the 2011 BBS Net Change in Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 1 – the 2011 BBS Overall Brand Opinion League Table

Where is Money Being Spent in the Broadcast Industry in 2011? The 2011 BBS Broadcast Industry Global Project Index

Tracking Changes in Broadcast Industry Trends — 2011 Versus 2010

Broadcast Industry’s Most Comprehensive Market Study Reveals Top Trends of 2011

More Information About the 2011 Big Broadcast Survey from Devoncroft Partners

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Thoughts on the Grass Valley – PubliTronic Deal, Including Press Conference Slides

broadcast technology market research, Broadcast Vendor M&A | Posted by Joe Zaller
Oct 13 2011

Yesterday, Grass Valley announced that it has acquired Dutch Channel-in-a-Box (CiaB) vendor PubliTronic via an online press conference.  This in an interesting move for a number of reasons, and Grass Valley did a good job of explaining its rationalize for the transaction.

During the presentation Grass Valley showed a slide deck that outlined its reasons for buying PubliTronic, provided an overview of the CiaB market opportunity and laid out its strategic objectives for this space.

Grass Valley says the broadcast market is changing more rapidly than ever, and that it is working to position itself as the “trusted transformation expert,” which can provide the appropriate mix of hardware, software and services to broadcast customers facing unprecedented change.

Grass Valley says it wants to become “the premier video technology solutions company.” This plan includes software, services, differentiated products, moving “down market” where opportunities are greater, and moving into emerging markets where there is higher growth.

The company sees integrated playout as a prime example of a fast growing, but currently underserved market. During the press conference GV said that the CiaB space is one of the fastest growing areas of the broadcast market, and that the acquisition of PubliTronic will help it go after this space, while better serving the needs of its customers.

It will be interesting to see how Grass Valley executes on this deal and deploys the PubliTronic products (now rebranded as Grass Valley K2 Edge).

There’s no doubt that Grass Valley is one of the premier brands in the broadcast industry, but many of their products such as switchers, servers and routers are hardware based and used in live production and studio applications.

Conversely, the CiaB market is all about software, and some traditionally hardware-focused companies have had a difficult time making the transition to a more software-centric approach. Of course Grass Valley’s video servers are widely deployed in the playout space, and the company undoubtedly has extensive technical expertise in this area, so maybe the transition will be smooth.

While the purchase of a 32-person playout software company is not a “bet the company” move for Grass Valley, it’s still critically important for the company to get this acquisition right.  New CEO Alain Andreoli, made it clear at IBC that he (and new GV owner Francisco Partners) sees software and services as core to the company’s future success.  The PubliTronic deal is a significant step in this direction.

There’s no doubt that the PubliTronic product offering is very capable.  However, Grass Valley is far from alone in going after the CiaB market.  Miranda, Snell, Evertz, Playbox and VSN are all vying for leadership in this space, and there are rumors that both Harris and Harmonic (Omneon) will be throwing their respective hats into this ring before NAB 2012. Expect to be hearing a lot about integrated playout / CiaB over the next six months.

At the end of the press conference Grass Valley CEO Alain Andreoli said that this deal shows that Franscisco Partners is committed to building a new Grass Valley and that it’s putting its money where its mouth is in order to do so.  It’s going to be very interesting to watch
how this shakes out over the next year or two.

The slides from the Grass Valley – PubliTronic announcement press conference (or at least most of them) are shown below.  They are worth reading as they do a good job of explaining the market dynamics, Grass Valley’s strategy, and the PubliTronic product offering.

 

 

 

 


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Related Content:

More Broadcast Vendor M&A: Grass Valley Buys PubliTronic, Enters Integrated Playout / Channel-in-a-Box Market

Press Release: Grass Valley Extends Leadership in IT-based Playout Solutions with Acquisition of Integrated Playout Solutions Provider PubliTronic

Press Release: Grass Valley Announces New K2 Edge Automated, Multichannel, Integrated Playout Solution

Announcement Coming From Grass Valley

BC 2011 Trends: Cloud, Channel-in-a-Box, 3D

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More Broadcast Vendor M&A: Grass Valley Buys PubliTronic, Enters Integrated Playout / Channel-in-a-Box Market

broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast Vendor M&A | Posted by Joe Zaller
Oct 12 2011

Grass Valley announced today that it has purchased PubliTronic, a Netherlands-based broadcast technology supplier.  Terms of the acquisition were not disclosed.

PubliTronic provides integrated playout or channel-in-box (CiaB) solutions for broadcast playout applications.  According to Grass Valley executives, CiaB solutions have been deployed by approximately 5% of the market today and represent “one of the fastest growing segments in broadcasting, [and is] expected to increase significantly over the next three years.”

PubliTronic’s CiaB product provides an integrated playout package featuring a video server, media management, automation, broadcast graphics and other master control functionality.  PubliTronic’s products will be incorporated into the Grass Valley product line-up and will be re-branded as the Grass Valley K2 Edge.

The acquisition of the PubliTronic product line complements the existing Grass Valley server product business and puts Grass Valley into the automated playout business, which is shaping up to be one of the next battlegrounds in the broadcast technology business.  It was certainly one of the most important trends at the recent IBC 2011 trade show.

With the purchase of PubliTronic, Grass Valley joins the growing list of broadcast vendors who are making major bets in this area.  In addition to Miranda, Evertz, Snell, Grass Valley, PlayBox and VSN; who are now all vying for leadership in this segment, I’ve heard rumors that other firms including both Harris and Harmonic (Omneon) could launch CiaB products by NAB 2012, making this both a hot topic and a very crowded space.

With most CiaB systems providing similar functionality, it will be important for Grass Valley to differentiate itself from its competition.  In a statement, the company sought to do this, saying: “What this acquisition brings to customers is much more than a simple “channel-in-a-box” solution. Our next-generation K2 Edge™ server is a sophisticated and very powerful multichannel, integrated, automated playout system that delivers benefits to our customers from day one.”

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Related Content:

Press Release: Grass Valley Extends Leadership in IT-based Playout Solutions with Acquisition of Integrated Playout Solutions Provider PubliTronic

Press Release: Grass Valley Announces New K2 Edge Automated, Multichannel, Integrated Playout Solution

Announcement Coming From Grass Valley

BC 2011 Trends: Cloud, Channel-in-a-Box, 3D

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Announcement Coming From Grass Valley

broadcast technology market research | Posted by Joe Zaller
Oct 11 2011

Grass Valley said today that it will be making a “significant corporate announcement” on October 12th.

This language would seem to indicate some kind of M&A deal, rather than a product announcement.

Grass Valley’s new parent company, Francisco Partners, has been open with the market about their strategic commitment to Grass Valley and the broadcast market.  Tomorrow’s announcement will presumably reveal the next stage in this strategy.

 

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Harris Corporation Names New President and CEO

Uncategorized | Posted by Joe Zaller
Oct 10 2011

Harris Corporation has appointed William Brown president and chief executive officer effective November 1, 2011. Brown succeeds current CEO Howard Lance, who announced in May 2011 his intention to retire when a successor was named. Lance will continue to serve as chairman, president and CEO through October 31, 2011, and will then serve as non-executive chairman of the Board until December 31, 2011.

Brown joins Harris from United Technologies Corporation where he held several senior leadership roles since he joined the company in 1997. During the past six months, as Senior Vice President, Corporate Strategy and Development, he has been responsible for the company’s global strategic planning and M&A activity.

“I am excited to join Harris at such an important time in the company’s history,” said Brown. “During the past decade Harris has transitioned into a diversified provider of ultra-reliable communications and information technologies to government agencies and commercial markets worldwide. With its strong financial position, robust pipeline of potential opportunities and well-defined areas for new market entry, the company is ideally positioned for further growth. I look forward to working with the company’s talented management team to build on the success it has achieved.”

Brown received bachelor of science and master of science degrees in mechanical engineering from Villanova University and a master of business administration degree from the University of Pennsylvania Wharton School.

 

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