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

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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