Posts Tagged ‘cable’

Harmonic Revenue Dips 2 Percent in Q3 2012

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Oct 24 2012

Harmonic announced that its revenue for the third quarter of 2012 was $136.7m, down 2% versus the same period a year ago, and up 3% versus the previous quarter.

The GAAP net loss for the quarter was $8.2m, or $(0.07) per share, compared with a GAAP net income $3.5m or $0.03 per share last year, and GAAP net income of $17,000, or $0.00 per share last quarter.

Non-GAAP net income for the third quarter was $8.1m or $0.07 per share, versus non-GAAP net income of $12.7m, or $0.11 per share last year, and non-GAAP net income of $7.2m or $0.06 per share last quarter

The results were in-line with the company’s previously issued guidance of revenue in the range of $130m to $140m, and also in-line with the consensus expectations of equity analysts.

On a GAAP basis, gross margins and operating margins for the quarter were 44% and -1%, compared to 46% and 3%, respectively, for the same period of 2011, and 43% and -2% respectively last quarter.

Non-GAAP gross margins and operating margins for the quarter were 48% and 8%, versus 51% and 12%, respectively last year, and 48% and 7%, respectively last quarter.

Company CFO Carolyn Aver attributed the decrease in gross margins to product mix in the quarter, as well as shift of revenue to emerging markets where ASPs are lower.

 

On a product-line basis:

  • Video processing represented 37% of total revenue versus 41% last year, and 45% last quarter

 

  • Production and playout (Omneon) represented 17% of total revenue versus 19% last year and 16% last quarter

 

  • Edge and access revenue represented 29% of total revenue versus 28% last year and 25% last quarter.

 

  • Services represented 17% of total revenue, versus 12% last year and 14% last quarter.  This represents record service revenue for the company.  Aver said that service revenue grew 20% from the second quarter and 35% from last year’s third quarter. “Services in general and professional services specifically have been an area of focus for us. This quarter’s revenue represents the successful completion of several projects. I do expect that service revenue will decrease slightly in Q4,” she said.

 

.

On a segment basis,

  • Cable was 50% of revenue, versus 45% last year and 48% last quarter.  The company said that demand from cable operators was particularly strong for its edge & products, and it believes it is gain market share in this area

 

  • Satellite & telco accounted was 20% of revenue versus 25% last year and 21% last quarter

 

  • Broadcast and media was 3o% of revenue, versus 30% last year, and 31% last quarter

 

Although the company did say it had won some multi-screen deals in the quarter, Harmonic CEP Patrick Harshman said that “customers are generally still struggling to find the right business model necessary to justify volume investments in multi-screen and over the top capabilities.”

International sales accounted for 58% of revenue in the quarter versus 51% during the same period a year ago, and 54% last quarter. This company said the increase is primarily a result of strong growth in Asia-Pacific and some emerging market growth, offset in part by year-over-year declines in Europe.

Harshman said that Harmonic continues to see strong growth in US from cable and telco customers, but that demand from US satellite and media companies was down year-over-year.

Bookings in the quarter were approximately $128.7m, down 9% versus last year, and down 8% versus last quarter.  The company said that new orders from Europe were down over 15% year-over-year, but that it gained market share in Europe, in cable, edge & access, and in multi-screen. Order growth in Asia and other emerging markets was “solid.”

Total backlog and deferred revenue was $137.7m at the end of the quarter, up 10% versus last year, and down 6% versus the previous quarter when it was an all-time high for the company.

  

Guidance:

Harmonic anticipates net revenue in the range of $132 million to $142 million for the fourth quarter of 2012. GAAP gross margins and operating expenses for the fourth quarter of 2012 are expected to be in the range of 44% to 46% and $60 million to $61.5 million, respectively. Non-GAAP gross margins and operating expenses for the fourth quarter of 2012, which will exclude stock-based compensation and the amortization of intangibles, are anticipated to be in the range of 48% to 50% and $55 million to $56.5 million, respectively.

 

“Harmonic delivered sequential revenue and earnings growth, and more than $20 million of cash from operations, in what continues to be a challenging economic environment,” said Harshman. “Our competitive position remains strong, and we believe we gained market share in both domestic and international markets. We also made significant progress on new product developments that position Harmonic to capitalize on the next wave of investment by our customers, including cable access (CCAP), high efficiency video coding (HEVC) for next-generation Internet-delivered and Ultra HD video, and a further strengthened solution portfolio enabling multiscreen video services.”

 .

.

Related Content:

Press release: Harmonic Announces Third Quarter 2012 Results

Harmonic Q3 2012 Earnings Call Presentation

Harmonic Q3 2012 Conference Call Transcript

Previous Quarter: Euro Weakness Offsets Strength in US for Harmonic in Q2 2012

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

 

© Devoncroft Partners.  All Rights Reserved

 

.

 

Euro Weakness Offsets Strength in US for Harmonic in Q2 2012

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Jul 25 2012

Harmonic announced that its revenue for the second quarter of 2012 was $132.6m, down 1% versus the same period a year ago, and up 4% versus the previous quarter

GAAP net income for the quarter was $17,000, or $0.00 per share, versus GAAP net income of $400,000 or $0.00 per share during the same period a year ago.   Non-GAAP net income for the quarter was $7.2m or $0.06 per share, versus non-GAAP net income of $10.5 million, or $0.09 per share last year

The results were in-line with the company’s previously issued guidance of revenue $130m to $140m, but below the consensus expectations of equity analysts who were looking for revenue of $135m and non-GAAP net income of $0.07 per share.

On a GAAP basis, gross margins and operating margins for the quarter were 43% and -2%, versus 46% and 1%, respectively, last year; and 42% and -7% last quarter.  Non-GAAP gross margins and operating margins for the quarter were 48% and 7%, versus 51% and 11%, respectively last year.

Company CFO Carolyn Aver attributed the decrease in gross margins to product mix in the quarter, as well as the competitive environment, particularly in emerging markets.   

When asked on the company’s conference call with equity analysts about competitive pricing leading to lower gross margins, Harmonic CEO Patrick Harshman said emerging markets were particularly competitive.  However Harshman then went on to describe these markets as “beachfront property” where there is intense competition on the part of vendors to “get in on the foundation as new operators launch services and begin to expand.” Harshman went on to say that these market are strategically important and offer long-term growth potential. “We believe that being present as we are and as increasingly in places like Southeast Asia, in Brazil, in India, we think it’s very strategically significant. So, well, we’re not pleased with the gross margin, we believe the strategic value of the footprint that we’re establishing in these markets is quite valuable and important.”

On a product-line basis, video processing represented 45% of total revenue, production and playout (Omneon) represented 16% of total revenue, and edge and access revenue represented 25% of total revenue. Services represented 14% of total revenue and grew in absolute dollars.

On a segment basis, cable accounted for 48% of revenue, satellite & telco accounted for 21% of revenue, and broadcast and media accounted for 31% of revenue

International sales accounted for 54% of revenue in the quarter versus 59% during the same period a year ago, due primarily by weakness in Europe versus relative strength in the US.  More specifically, the company said that its revenue in the US grew by 10% in the quarter, but was offset by a 9% decline in Europe.  Service revenue in the quarter grew 13% versus last year, and the company said that it won more than 25 new projects for OTT video deployments, many at existing customers. 

Bookings in the quarter were approximately $139.5m, up 6% versus last year.  Harmonic said its total backlog of orders and deferred revenue now stands at $146m, an all-time record for the company. 

 

Omneon Performance

When asked by an analyst about the performance of Omneon, Harshman said the integration is “still a work in process,” and that Harmonic has been successful getting the Omneon sales force to take the historic Harmonic product line, including video processing and multi-screen products into the media and broadcast accounts, but he acknowledged that Harmonic  is doing somewhat less of a good job kind of cross selling the Omneon products the other way.

However Harshman went on to hint at some exciting prospects for the Omneon business, saying  “One of the kind of the apples in our eyes in terms putting Harmonic and Omneon together was to really to develop a whole next generation of – a new class of products that actually married or integrated historically disparate technologies. And well we are not prepared here to announce to anything yet. We are working in earnest on new products that really break down some barriers and we will really deliver I think exceptional, operational as well as capital saving to our customers that unify and integrate historically Harmonic and Omneon technologies. I think this is going to be really unique and powerful for us as well as our customers and well, we’re pretty excited about that.”

 

Senior Management & Board Changes:

Separately, the company announced several changes to its senior management team and board of directors. Longtime Harmonic executive Nimrod Ben-Natan was named SVP and GM of the company’s new Edge and Access business unit.  Cisco Systems alum Peter Alexander was named Harmonic’s new SVP and CMO, replacing Geoff Stedman who left the company in April 2012.   Joining from NetApp is Krishnan Padmanabhan who was named SVP of video products. In addition to these executive appointments, Mitzi Reaugh, senior vice president, strategy and business development at Miramax, has joined harmonic’s board of directors.

 

Guidance:

Harmonic said it anticipates net revenue in a range of $130m to $140m for the third quarter of 2012. GAAP gross margins and operating expenses for the third quarter of 2012 are expected to be in the range of 43% to 45% and $61 million to $62 million, respectively. Non-GAAP gross margins and operating expenses for the third quarter of 2012, which will exclude stock-based compensation and the amortization of intangibles, are anticipated to be in the range of 47.5% to 49.5% and $55 million to $56 million, respectively.

. 

 

 

Related Content:

 Press release: Harmonic Announces Second Quarter 2012 Results

 Harmonic Q2 2012 Conference Call Transcript

 Harmonic Announces $25 Million Stock Buyback Program

 Press release: Harmonic Adds Executive and Board Leadership

 Previous Quarter: Harmonic Q1 2012: Weakness in Europe Results in 4% Revenue Decline

 Previous Year: Harmonic Q2 2011 Revenues Falls Short of Estimates

 

© Devoncroft Partners.  All Rights Reserved

 

.

 

How are broadcast technology products typically purchased — direct from vendors, through an SI or a dealer?

broadcast industry technology trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
Apr 28 2010

This article is based on the findings from the 2010 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 5,600 people in 120+ countries participating, the 2010 version of the BBS is the largest and most comprehensive market study ever done in the broadcast industry.

I have previously discussed marco findings from my market research such as the most important technology trends in the broadcast industry, where money is being spent in the broadcast industry, and what broadcast technology products are currently being evaluated for purchase.

Today I am going to look at the way broadcast technology products are purchased – i.e. what purchasing channels are typically used by buyers of broadcast technology products.   

Survey respondents were asked how they typically buy broadcast technology products – direct from a vendor; through a systems integrator; through a dealer; or some other way. 

To show the variation in response, the results in the chart below are broken out by organization type.

Question: How do you typically purchase broadcast technology products?

Breaking out the answers to this question by organization type shows that there is considerable variation in the way broadcast technology products are purchased, with each type of broadcast technology buyer exhibiting different purchasing preferences.  These results are interesting because they highlight that there are some times when it makes more sense for vendors to use a channel than go direct.  They also show that there are some types of buyers who are more used to buying through the channel versus direct.

For example, cable/satellite/IPTV operators showed a strong preference to purchase directly from vendors (perhaps because of the relatively small number of these platforms as well as the large amount of equipment they require).

Respondents from educational institutions, film studios, post- production, and recording studios reported that they tend to purchase broadcast technology products via third-party dealers. 

Systems integrators (SIs) sit between the vendor and the dealer in terms of the percentage of customers who prefer to buy through them, but keep in mind that these rankings show only the number of customers who prefer to buy in a certain way.  They do not look at the value of the purchase that goes through any individual channel. 

SIs play a strong role across all customer types, but particularly with playout centers, cable programmers, and broadcasters.  It’s worth noting the customer types who show the strongest preference for systems integrators tend to the ones with the largest and most complex projects.

How do broadcast technology buyers typically purchase — direct from vendors, through an SI or a dealer?

Broadcast technology channel strategy, market research | Posted by Joe Zaller
Jul 06 2009

It’s a big world and in a global industry like broadcast technology hardware and software, even the largest vendors must rely on a mix of direct and indirect sales channels.  

As part of the 2009 Big Broadcast Survey, I asked technology purchasers how they typically buy broadcast technology hardware and software — direct from a vendor, or through a third-party channel like a systems integrator (SI) or dealer. 

The results are interesting because they highlight that there are some times when it makes more sense for vendors to use a channel than go direct.  They also show that there are some types of buyers who are more used to buying through the channel versus direct.

It turns out that overall, about 2/3 of customers purchase through a third-party supplier (dealer or SI), with the rest buying directly from the vendor.

However, when you break the results down by the type of customer (as I have done in the chart below),  you quickly see that there are differences between the typical purchasing habits of various customer types, and this information has important implications for vendors.

Question: How do you typically purchase broadcast technology products?

how_do_you_typically_purchase

Out of six different customer types, only “cable/satellite/IPTV operators” (companies like DirectTV, Sky, Comcast etc) and  “cable programmers” (companies like Discovery and HBO) typically buy more than 50% directly from vendors.  Perhaps this is because there are not that many of these customers, and they tend to be large. 

These customers also appear to rely heavily on systems integrators to plan and impliment their projects.   Many of these projects are large end up being “all or nothing” for vendors, so they are clearly paying special attention to these customers, and fighting for the business.

At the other end of the spectrum, customers in post production, government and education typically buy through  a dealer.  There are probably a variety of reasons for this:

  • In post production there are specialized local dealers who have both in-depth knowledge of the market and deep relationships with this (relatively small) customer base.  For many vendors, it makes sense to sell through these dealers rather than pay for a dedicated sales effort.  The downside of this is that it concentrates the power with dealers since they “own” the relationship with the customer base, increasing the risk of substitution.
  • Government is another category that requires strong relationships, and in some cases specialist credentials such security clearance and/or extensive operational experience.  Selling to the government (at least at the national level) can be lucrative for vendors, but it can also take major effort to break into this market.  At the local government level (e.g. every town hall in a country), the market is enormous but very disparate, and therefore often left to local resellers. In aggregate this is a large market, but most vendors are not geared up to go after it direct.
  • Education is arguably the largest market of all — after all there are many more schools than broadcasters and/or town halls — and yet only 20% of these customers typically buy broadcast technology hardware and software direct from vendors.  it’s likely that because of the size, not to mention huge diversity, of this customer base that a specialist dealer with deep relationships at the local level will always be best positioned to win this business.

 

This leave “broadcasters / TV station” customers in the middle of the pack.  There are likely a variety of reasons for this.  For example, this is broad category that encompasses state / national broadcasters as well as local players.  Vendors with limited resources (e.g. just about all of them) who are after large sales will tend to concentrate their efforts on the biggest part of the market (in value terms) and leave the rest to dealers.  Also there are certain regions (like parts of Asia and South America) where the most efficient way to sell (even to the largest broadcasters) is through third party distribution.

I should point out that this question does not ask about the value of product purchased from each category, but if I did I think that it would further highlight the important role of systems integrators and consultants.    As customers look to cut cost they often eliminate technical staff positions, effectively outsourcing their technical design and installation to third party consultants — systems integrators in particular.  SIs were found to play a strong role in all categories — and particularly in those which tend to have large, complex projects.  After all, if a broadcaster is buying a replacement part for an existing system it’s easy to go to a dealer; but if they are building a disaster recovery facility as part of a major strategic initiative, they are likely to go with an SI.

These finding highlight that it’s important for suppliers to tailor their approach to different markets and customer types.  It also demonstrates that the third-party distribution channels are a crucial part of their business, because they account for a significant portion of the market access that all vendors need to survive and thrive.

Broadcasters see streaming / broadband as fastest growing content delivery method

content delivery, market research, technology trends | Posted by Joe Zaller
Jun 24 2009

Almost as soon as I uploaded the post which-method-of-content-delivery-will-grow-the-fastest?  I started to wonder what broadcasters themselves think about this question.  To find out, I ran a query on the data from the 2009 Big Broadcast Survey, and compiled the results in the chart below.

This represents how 1000+ broadcasters around the world answered this question: 

 ”Which of these delivery methods do you think will grow the fastest over the next three years, in percentage terms?”

  • WiMAX
  • Terrestrial
  • Cable
  • Downloads to mobile devices
  • Satellite
  • Mobile TV
  • IPTV
  • Broadband / Streaming (web TV)

 

 #1 by a good margin is broadband / streaming, followed by IPTV and mobile TV. 

 

The fastest growing content delivery methods according to broadcasters

The fastest growing content delivery methods according to broadcasters

 

These top three choices get 72% of the vote from broadcasters on this question.  That’s pretty interesting since these are potentially competitive (and certainly disruptive) to the broadcaster’s traditional business model.

Does this means that broadcasters are predicting their own demise, or does this acknowlement of the  growth of new content delivery methods mean they will embrace them and tap into the new ways of doing business?

Which method of content delivery will grow the fastest?

content delivery, market research, technology trends | Posted by Joe Zaller
Jun 24 2009

It’s not news that the delivery of video content is changing dramatically.  Consumers want an anywhere, anytime media experience; and content owners are doing all they can to meet their needs.   But with so many choices now available, I was curious to know which delivery method broadcast industry insiders think will grow the fastest.

To find out, I included the following question in the 2009 Big Broadcast Survey:

 “Which of these delivery methods do you think will grow the fastest over the next three years, in percentage terms?”

  • WiMAX
  • Terrestrial
  • Cable
  • Downloads to mobile devices
  • Satellite
  • Mobile TV
  • IPTV
  • Broadband / Streaming (web TV)

 

Almost 5000 people in 110 countries responded and their answers are shown below, broken down by geography to show regional variation:

 

Which method of content delivery do you think will grow the fastest over the next three years, in percentage terms?

Which method of content delivery do you think will grow the fastest over the next three years, in percentage terms?

 

Keep in mind that this question asked which delivery method will grow the fastest, not which one do you think will win in the long-term, or which one are you willing to pay $50 per month for.  It also asked about growth in percentage terms, so if a distribution method is small today it can grow quickly in percentage terms from a small base, while it’s much more difficult for established content delivery methods such as cable & satellite to grow in percentage terms.

Nevertheless, the respondents expect to see major changes in content delivery methods over the next three years, led by “Broadband / Streaming.”    In fact, with the exception of Asia, all geographies expect broadband / streaming delivery of content to be the fastest growing delivery methods, which is interesting news for CDNs.  In Asia (excluding China), IPTV is predicted to be the fastest growing content delivery medium.  All territories therefore expect the current incumbents (satellite, cable and terrestrial) to lose market share to the internet and to a lesser extent, mobile.

Although the picture is relatively similar across all geographical regions, there are a few key differences, reflecting the relative maturity of each market.  For example, in most markets satellite is already a well-established channel with limited future growth; however in China the picture is different with expected growth being second only to broadband / streaming content delivery.  Chinese respondents also predict the largest take-up of mobile TV.

That’s what broadcast industry insiders think.  What about you?

 
 

%d bloggers like this: