Harmonic announced today it has reached an agreement to sell its cable access business to Aurora Networks $46m in cash. The deal is expected to close by the end of the first quarter of 2013.
The company said it expects to net approximately $35m from the transaction after tax. All proceeds from the sale will be used to repurchase shares, in support of the company’s ongoing efforts to review its capital structure and to deliver value to all its stockholders,
Cable access products, which includes optical transmitters, amplifiers, receivers and nodes, generated $52.9m in sales for Harmonic in 2012, approximately 10 percent of the company’s overall revenue $530.5m in 2012.
However the gross margins for the cable access product portfolio was only 30% in 2012, compared to GAAP gross margins of 49% for the Harmonic’s business as a whole in 2012.
Harmonic admits that it is “not a leader in the cable access product area”, and that there is “limited strategic synergy between cable access and the company`s other higher growth product lines.” The company says that its decision to divest its cable access business “reflects its commitment to the video production and playout, video processing, and cable edge product areas, where it currently holds market share leadership.”
“The sale of the Cable Access business enables us to sharpen our focus on our largest growth opportunities,” said Harmonic CEO Patrick Harshman. “Cable Access was Harmonic`s lowest margin product line, and through this transaction and the increase in our authorized share repurchase program, we will continue to drive growth in our core markets, expand our gross margin, reduce our outstanding shares, and position our business for stronger long-term earnings.”
The company has issued revised financial guidance as a result of the sale of its cable access product line.
Harmonic says it now expects net revenue in the first quarter of 2013 to be in the range of $100m to $110m, down from $115m to $125m. Gross margins for the first quarter of 2013 are now expected to be in the range of 51.5% to 52.5%, up from the 49% to 50% guidance issued previously.
Press Release: Harmonic to Sell Cable Access Business to Aurora Networks for $46 million
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