Posts Tagged ‘Carolyn Aver’

Harmonic Exceeds Expectations in Q2 2013 Thanks to Strength in Broadcast and Media Markets

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Jul 29 2013

Harmonic announced that it revenue for the second quarter of 2013 was $117.1M, a decline of 4% versus the same period a year ago, and an increase of 15% versus the previous quarter. The company’s  largest customer for the second quarter of 2013 was Comcast, at 11% of revenue.

Q2 results were presented on a pro-forma basis, excluding revenue from the Harmonic’s cable Access HFC business, which was sold to Aurora Networks for $46m on March 5, 2013.

Harmonic CEO Patrick Harshman said that although the quarter started off slowly in January, momentum built throughout February and March, and the company “saw better linearity throughout the quarter than we’ve seen for some time.”  Harshman added that “the second quarter also saw the percentage of domestic business increase, with particular strength from the broadcast and media market, driving our product mix towards higher-margin video processing and production and playout products.”

Investors like the results, which exceeded the expectations of equity analysts as well as Harmonic’s previously issued guidance of Q2 or revenue in the range of $105m to $115m, and sent the company’s shares higher following the announcement.

The GAAP net loss for the quarter was $3.4m, or ($0.03) per share, compared with a GAAP net loss of $3.9m, or ($0.03) per share, during the same period last year, and a GAAP net loss of $9.5m, or ($0.08) per share, in the previous quarter.

On a non-GAAP basis, the company posted net income of $5.6m, or $0.05 per share, compared with non-GAAP net income of $6.5m, or $0.06 per share last year, and a non-GAAP net loss of $2.7m, or ($0.02) per share, for the first quarter of 2013,

Bookings in the second quarter of 2013 were $126.3 million, compared with $110.1 million for the first quarter of 2013 and $128.5 million for the second quarter of 2012.

Harshman noted that bookings “significantly exceeded revenues in the quarter,” and were driven by continuing improvement in the Europe, Middle East, and Africa region and strong performance and Latin America. Harshman also said that the company’s broadcast and media market, and its Omneon business, “continue[s] to be strong and notably drove progress in our domestic business.” However, Harshman said that demand from US Pay-TV service providers continue to be soft.

 

On a geographic basis:

international markets accounted for 53% of total revenue in the quarter, down from 54% last year, and down from 58% last quarter.

Harmonic’s CFO Carolyn Aver said “while our international revenues grew in absolute dollars, the biggest growth in dollars came from the US; strongest in broadcast and media, but also in telco, satellite, and cable. Video processing represented 53% of revenue, up from 49% in the second quarter of 2012.”

 

On a product line basis:

  • Video processing represented 53% of revenue, up from 49% in the second quarter. Harshman said that strength from the broadcast and media market drove Harmonic’s product mix towards higher-margin video processing products, including positive progress around its new CCAP platform.

 

  • Production and playout (Omneon product sales minus associated service revenue) represented 19% of revenue this quarter compared to 17% for the same quarter last year, and 22% last quarter.

 

  • Cable edge business represented 11% of revenue, a decrease from 19% of revenue last year, and 17% of revenue last quarter. Aver said: “It is worth noting that in this quarter last year we had higher Edge revenue but lower gross margin, as we sold more of the hardware platform, or the razors. This quarter, we sold more software licenses into that equipment, or the razor blades, which resulted in lower revenue dollars but higher gross margin.”

 

  • Service and support revenue was 17% of revenue this quarter, up from 15% last year and down from 19% last quarter.

 

 

On a segment basis:

  • Broadcast & media represented 40% of revenue, up from 33% last year, and 38% last quarter. The company attributed the increase in broadcast sales to the continuing success of cross-selling video products from both Harmonic and Scopus into this customer base. Harshman said that Harmonic has made progress with broadcast and media companies globally, and that the company sees these organizations as a large and growing opportunity. He said the company’s Spectrum ChannelPort solution is “gaining real market traction,” and that the company had a “big competitive win with a new account, taking us to significant projects now in three of the top five US media companies so far this year.”

 

  • Cable represented 36% of revenue, down from 44% last year, and 39% last quarter.  Aver said that the company believes cable revenues will increase “back to the historical range” once its new NSG Pro product is deployed in the market. Harshman noted that “while the US Pay-TV operator market has, of late, represented a challenging space for us due to where they are in technology cycles, it’s important to remember that the levels of consumer penetration and high RPUs mean that they will always have tremendous buying power.”

 

  • Satellite and telco represented 24% of revenue versus 23% of revenue last year and last quarter.

 

Q2 2013 Revenue Details:

 

Harmonic Q2 2013 Revenue Mix

 

GAAP gross margin was 49% and GAAP operating margin was (4%) for the second quarter of 2013, compared with 45% and (15%), respectively, for the first quarter of 2013, and 45% and (3%), respectively, for the same period of 2012.

Non-GAAP gross margins were 54% in the quarter, better than previously issued guidance of 51.5% to 52.5%. The non-GAAP operating margin was 6%, compared with 51% and (3%), respectively, for the first quarter of 2013, and 50% and 7%, respectively, for the same period of 2012.

Aver attributed the margin expansion in the quarter to greater sales of higher margin video processing products, particularly in the cable edge category, than to sales of new software licenses on existing hardware platforms.

Aver went on to say that the company’s margins “started in the 40s and have moved up. We certainly expected, with the sale of the Access business, that low 50% would move to, call it, 52% or 53%, and for some time, we’ve targeted the mid-50s as the place we want to go. I don’t think this says we’re there yet. I think it shows that when we do well in video processing and P&P, those are definitely our highest gross margin products. And that has a big influence on how our margins come out. Also, as more and more of our products have more of the software component, and we get to quarters where we’re delivering a lot of licenses, that as well has a big impact on the margins.”

Non-GAAP operating expenses for this quarter were $56.1 million, up from $55.2 million in the first quarter of 2013, and up from $52.4 million in the second quarter of 2012.   Non-GAAP operating expenses were higher than the previous guidance of $54m to $55m. The company said the increase in operating expenses was due to costs related to bringing our new products to market, as well as increased costs related to litigation.

Harmonic generated approximately $24.8m of cash from operations in the second quarter, and used approximately $85.6m, excluding related costs, for its repurchase of approximately 12 million shares in the tender offer and approximately 1.8 million shares under its previously announced share repurchase program.

The Company also announced it will expand its existing share repurchase program by $85 million, providing for a total of approximately $100 million of share repurchases going forward. Since April 2012, Harmonic has authorized the repurchase of $220 million of its common stock, and has repurchased approximately $120 million of its common stock to date.

Harmonic ended the quarter with 1,078 employees, slightly down from 1096 at the end of the previous quarter. Cash at the end of the second quarter was $161.7m, down $66.6m from $228.3 at the end of the first quarter of 2013. quarter.  The decrease in cash was due primarily to repurchasing of the company’s stock.  Backlog and deferred revenue at the end of the second quarter was $132.5m, compared to $126.3m as of March 29, 2013.

 

Business Outlook

Aver said the company is “cautiously optimistic about our international business and our domestic broadcast and media business,” and noted that the company expects some project revenue that was previously booked to be recognized in the third quarter of 2013.

Therefore, Harmonic expects Q3 2013 revenue to be in a range of $115m to $125m in the third quarter of 2013.  Q3 GAAP gross margins are expected to be in the range of 45% to 46% . Q3 GAAP operating expenses are expected to be in the range of $60.5m to $61.5m.  Q3 Non-GAAP gross margins Are expected to be in the range of 50% to 51% . Q3 Non-GAAP operating expenses are expected to be in the range of $54.5m to $55.5m.

.

.

© Devoncroft Partners 2009 – 2013. All Rights Reserved.

.

 

Related Content:

Press Release: Harmonic Announces Second Quarter 2013 Results

Harmonic Q2 2013 Results Earnings Call Transcript

Harmonic Q2 2013 Earnings Conference Call Presentation

Video: Harmonic & Gray TV Currently Among “The Best Stocks Under $10” According to Bespoke Capital

Previous Quarter: Harmonic Revenue Declines 14 Percent in Q1 2013

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

Activist Investor Targets Harmonic

Harmonic Announces $100 Million Stock Buyback, New Chairman

Broadcast Vendor M&A: Harmonic Divests Low Margin Cable Access Business to Aurora Networks for $46 Million

.

.

Harmonic Revenue Declines 14 Percent in Q1 2013

broadcast technology market research | Posted by Joe Zaller
Apr 25 2013

Harmonic announced that it revenue for the first quarter of 2013 was $101.7m, down a decline of 14% versus the same period a year ago, and a decline of 13% versus the previous quarter.

The GAAP net loss for the quarter was $9.5m, or ($0.08) per share, compared with a GAAP net loss of $8.7m, or ($0.07) per share, during the same period last year, and GAAP of $0.9m, or $0.01 per share in the previous quarter.

On a non-GAAP basis, the net loss for the first quarter of 2013 was $2.7m, or ($0.02) per share, compared with non-GAAP net income of $2.2m, or $0.02 per share, during the same period last year, and non-GAAP net income of $8.3m, or $0.07 per share, during the previous quarter.

These figures exclude revenue from the company’s cable Access HFC business, which was sold to Aurora Networks for $46m on March 5, 2013. GAAP net income from discontinued operations, excluding the $15.0m gain on the sale of Cable Access HFC, was $1m, or $0.01 per share. Non-GAAP net income from discontinued operations, excluding the gain on the sale of the Cable Access HFC business, was also $1m, or $0.01 per share.

The results were at the low end of the company’s previously issued revenue guidance of net revenue in the first quarter of 2013 to be in the range of $100m to $110m, down from $115m to $125m prior to the sale of the cable access business. However, they were below the consensus estimates of equity analysts who were looking for revenue of $110.8m and a profit of $0.01 per share.

International markets accounted for 58% of total revenue in the quarter, up from 52% last year, and down from 62% last quarter. Harmonic CEO Patrick Harshman said that the company’s international growth was driven largely by improvement in the EMEA region, which had recorded its best quarterly intake since 2011. Harshman said that the “lion’s share” of EMEA demand was coming from northern Europe, eastern Europe and Russia.

However, Harshman cautioned that revenue from domestic service providers continued to be challenged, continuing the trend from the previous quarter.

On a product basis, production and playout (Omneon product sales minus associated service revenue) represented 22% of revenue this quarter compared to 18% for the same quarter last year. Cable edge business represented 17% of revenue, a decrease from 22% of revenue last year. Service and support business increased to 19% of revenue from 15% for the same quarter last year.

On a segment basis, broadcast & media represented 38% of revenue, cable represented 39%, and satellite and telco represented 23% of revenue.

GAAP gross margin for the quarter were 45%, up from 43% last year.  Non-GAAP gross margins were 51%, up from 49% last quarter, and down from 56% last quarter.  Harmonic CFO Carolyn Aver said that the company’s gross margins last quarter were unusually high and not expected to be repeated in the first quarter.  The company had previously said that it expected gross margins for the quarter to be in the range of 51.5% to 52.5%.

Harshman attributed the margin expansion to “both an increase from recent run rate margins due to the divestiture of the margin-diluted access business and a reduction from the high-margin software heavy mix that of the previous quarter.”

The GAAP operating margin for the quarter was -15% last year, compared -8% last year. The non-GAAP operating margin was – 3%, compared 2% last year.

On the company’s earnings call, Harshman described the three primary elements of the company’s strategy to enhance shareholder value:

  • the company’s previously announced strategic growth plan, which includes investments in new technologies (including CCAP, HEVC encoding, 4K, and multi-platform content delivery); and a significant expansion of the company’s global customer base

 

 

  • the continuing evolution of the company’s board of directors

 

Harmonic ended the quarter with 1,096 employees, up from 1,081 at the end of the previous quarter, and $228.3m in cash, up $27.1 million from the previous quarter.

The company’s current cash position and stated intention to repurchase up to $100m of its stock prompted Cortina Asset Management analyst Andrew Storm to ask Harshman if this means that Harmonic has “effectively put M&A off the table for the next couple of years.”

Harshman responded by saying “I think our position on M&A hasn’t changed. But we have not said that it’s definitively off the table, and I think that position hasn’t changed. That being said, we see ample opportunity the technology we have under the roof and the opportunity we have to bring that technology to market, our focus has been and continues to be very much on the organic development of our market — the organic pursuit of these opportunities.”

Storm followed up by asking if Harmonic would do a large M&A deal in the next year or two. Harshman responded saying “I don’t anticipate that we would, and we have had not anticipated that for some time.”

 

Guidance:

Aver said that Harmonic entered the quarter with the highest percentage of backlog in deferred revenue to revenue in the company’s history, and that the company is currently working on several large projects that won’t be recognized until the latter half of this year.

“Therefore, we expect to see our revenue build over the year and our Q2 revenue to be in the range of $105m to $115m in the second quarter of 2013. Non-GAAP gross margins for the second quarter are expected to be in the range of 51.5% to 52.5%, and we have targeted our non-GAAP operating expenses for the second quarter to be $54m to $55m.

.

“Harmonic continues to execute on our organic growth strategy and shareholder value initiatives,” said  Harshman. “During the quarter, we saw year-over-year growth in orders from international customers and domestic broadcast and media customers – both verticals core to our strategic growth plan. Although demand from domestic pay TV service providers remained soft during the quarter, many domestic customers are beginning to look ahead to new video infrastructure investments in emerging CCAP, HEVC, and Ultra HD technologies. Harmonic is making good progress in our efforts to establish a market-leading position in these new technology areas, as evidenced by our recent product announcements and positive customer feedback. In addition, with a strong balance sheet and continuing prospects for positive cash flow, we announced yesterday a tender offer for up to $100 million of our common stock as part of our ongoing commitment to create shareholder value.”

.

.

Related Content:

Press Release: Harmonic Announces First Quarter 2013 Results

Harmonic Q1 2013 Earnings Call Presentation

Broadcast Vendor M&A: Harmonic Divests Low Margin Cable Access Business to Aurora Networks for $46 Million

Previous Quarter: Harmonic Announces Q4 and Full Year 2012 Results

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

.

© Devoncroft Partners. All Rights Reserved.

.

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

 

.

 

Harmonic Q2 Revenues Falls Short of Estimates

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Jul 28 2011

Harmonic announced that its net revenue for the second quarter of 2011 was $134m, up from $95.5m in the second quarter of 2010. Including the contribution from Omenon, which was acquired in September 2011, the company’s revenue was up 5% versus the same period a year ago.

GAAP net income for the quarter was $400,000, compared to net income of $4.4m for the second quarter of 2010. Non-GAAP net income for the quarter was $10.5m, compared to non-GAAP income of $9.1m for the same period of 2010

The results were below both the consensus of equity analysts, who were expecting revenue of $139.4m, and Harmonic’s own previously issued earnings guidance of $137m-$141m.  The company attributed the revenue shortfall to lower than expected sales into the US cable TV segment, the timing of revenue on large encoding projects in the US market, revenue recognition, and an unfavorable margin mix.

On the company’s earnings conference call with equity analysts, Harmonic CEO Patrick Harshman directly addressed the revenue shortfall, saying: “I want to be clear that we’re not satisfied with the financial results of this quarter. Having said that though the delta between our previous guidance and the final result is modest, and while our near-term outlook has been affected by the marketplace issues, our strategic direction remains very much on track and our medium-to-longer-term growth outlook remains positive. I also want to be clear that once we confirmed we did not reach our revenue goals, we accelerated the process of determining and communicating to our revenue, earnings, and importantly updated outlook for the remainder of the year.”

On a GAAP basis, gross margins in the quarter were 46%, and GAAP operating margins were 1%, compared to 48% and 4%, respectively, for the same period of 2010. Non-GAAP gross margins were 51% and non-GAAP operating margins were 11% for the second quarter of 2011, compared to 51% and 13%, respectively, for the same period of 2010.

Revenue from Omneon product sales in the quarter were $25.5m, an increase of 15.6% versus the previous quarter, but down 4.3% when compared to the same period a year ago. Harmonic does not break out service revenue from the Omneon business, but CFO Carolyn Aver, in response to questions from analysts on the earnings conference call, indicated that Omneon’s service revenues were approximately 15% of product sales.

Harshman said that the Omneon integration has gone well overall, but he acknowledged progress has been slower expected with respect to both cross-training and cross-selling. Harshman said that the company has already realized some important sales synergies and that as a result the combined company’s revenue in the broadcast segment has increased significantly,  and that he expect to continue to additional progress in this area through the second half of the year.

International sales represented 59% of revenue during the quarter, up 26% year-over-year on a pro forma basis. However, sales in the domestic market business declined 15% versus the same period a year ago.

 

1H 2011 Performance:

For the first six months of 2011, net revenue was $266.8, up from $180.4 million in the same period of 2010. GAAP net income for the first half of 2011 was $0.9m, compared to $9.8m, for the same period of 2010. Non-GAAP netcome for the first half of 2011 was $20.7m, compared to $15mfor the same period of 2010.

 

Updated Guidance:

Aver provided update revenue guidance, saying that while Harmonic “is very positive on mid-to-long-term opportunities, the short-term domestic market issues cause us to be more cautious for the remainder of the year. At this time, we expect revenue for the full year to be in the $540m to $550m range. We expect gross margin to be in the 50% to 52% range with the product and geographic mix continuing again to influence whether we’re on the high or low end of the range for gross margins. We expect expense management as well as seasonality to deliver a sequentially lower operating expenses in Q4 by as much as a couple of million dollars. We do continue to target a 14% to 16% annual operating margin goal. Although, given the Q2 results, we won’t achieve that goal for 2011.”

 

Related Content:

Press Release: Harmonic Announces Second Quarter 2011 Results

Harmonic Q2 2011 Earnings Call Transcript

Harmonic Q2 2011 Earnings Call Transcript

Press Release: Harmonic Announces First Quarter 2011 Results

 

Harmonic Announces Q4 and Full Year 2010 Results

broadcast technology market research, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Feb 03 2011

Harmonic reported that its net revenue for the fourth quarter of 2010 was $138.2m. This includes a full quarters’ revenue from Omneon, which contributed $30.9m, but excluded $0.8 million of certain deferred revenue that would otherwise have been recognized by Omneon had the acquisition not occurred.

Excluding Omneon, Harmonic’s Q4 stand-alone net revenue was $107.3m, up 8% from the previous quarter and up 24% from the fourth quarter of 2009.  International sales represented 54% of the company’s revenue for the quarter. 

In order to help understand the impact of the Omneon acquisition on its performance, Harmonic CFO Carolyn Aver provided the following slide in the company’s presentation to equity analysts:

.

 

 .

On a GAAP basis the company reported a net loss of $13.7 million in the fourth quarter, compared to net income of $47 thousand, for the fourth quarter of 2009. GAAP gross margins in the quarter were 44%.

For the full year 2010, Harmonic’s stand-alone net revenue was $386.8m, up 21% from 2009.   The company attributed its growth to the continued global move to HDTV operations as well as year-end spending by some customers. GAAP net loss was for the full year was $4.3m, compared to a GAAP net loss of $24.1m in 2009.

The company provided forward looking guidance, saying that it expects revenue for the first quarter of 2011 to be in the range of $129m to $132m, with GAAP gross margins in the range of 45% to 47%. Analysts had been expecting revenue of about $128.4m.

 .

Strategic Imperatives for Future Growth

On the company’s earnings conference call with equity analysts, Harmonic president and CEO Patrick Harshman said that the with the acquisition of Omneon, the company was now positioned as a leading infrastructure company for video, and that it now has unique opportunities to grow.

Harshman went on to say that the company had identified four strategic imperatives for the future:

“First, we intend to leverage our increased scale, solution breadth and competitive strength to expand our brand and deepen our customer relationships in both developed markets, while also continuing to work aggressively to capture greater market share in emerging economy markets.

“Second, we intend to extend our leadership position in new applications in new customer verticals; namely, multi-screen, new internet media services and video production.

“Third, our objective is to continue to lead the market in technology innovation and deliver on the exciting pipeline of new products and solutions we have scheduled for release over the course of the year.

And finally, we intend to continue to enhance our operational execution.”

 .

Omneon Integration:

Company CFO Carolyn Aver said that the integration of Omneon was going well and that company had taken the following actions during the fourth quarter:

  • Integration of the Omneon operations organization
  • Moved the Omneon manufacturing lines to Harmonic’s contract manufacturer in Malaysia
  • Integrated the Omneon G&A team with Harmonic’s
  • Migrated Omneon’s ERP process to Harmonic’s Oracle system
  • Physically relocated Omneon staff into Harmonic’s offices in San Jose California and the UK

.

Aver said that these actions would likely result in synergy savings of around $10m during 2011.

Harshman provide an upbeat statement, saying “Moving into 2011, we expect broadcasters, media companies and video service providers around the globe to continue to invest in producing and delivering high value video programming and services. You can expect us to continue to introduce innovative new technologies that enable this dynamic video marketplace to proceed. We’re excited about our expanding opportunities for growth in 2011 and beyond.”

.

.

You can read the full Harmonic Q4 and full year 2011 earnings release here.

A copy of the Harmonic Q4 investor presentation is here.

A transcript of the company’s equity analyst conference call is here.

A write up of Harmonic’s Q3 2010 results are here.

.

.

 

Harmonic Announces Q3 Results, Provides Detailed Omneon Update and Q4 Guidance

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Oct 28 2010

Harmonic today announced that its net revenue for the third quarter of 2010 was $104.8m.  This figure includes a $5.6m contribution from the two week period that recently acquired Omneon was officially part of Harmonic, and excludes $1.3m of certain deferred revenue that would otherwise have been recognized by Omneon had the acquisition not occurred.

Based on these revenue levels, the company posted a GAAP net loss of $0.4m, versus net income of $2.6m a year ago; and non-GAAP net income of $9m, up from $4.5m for the same period of 2009.

Excluding Omneon’s contribution, Harmonic’s net revenue was $99.2m up 18% compared to the third quarter of 2009 and up 4% sequentially, with international sales accounting for 48% of total revenue in the quarter. The company attributed this revenue increase to the global move to HDTV, which has driven customers to upgrade their SD and HD encoders and deploy switched digital video.

GAAP gross margins for the quarter were of 45% and GAAP operating margins were 2%, up from 43% and (1%), respectively, for the same period of 2009. Non-GAAP gross margins were 49% and non-GAAP operating margins were 12% for the third quarter of 2010, up from 47% and 8%, respectively, for the same period of 2009.

On the order front, the company reported that its bookings increased 22% to $97.5m, excluding Omneon, and that orders from international customers orders were the strongest ever.

Year to date, the company’s net revenue (excluding Omneon) was $279.6m, an increase of 20% versus the first nine months of 2009. 

.

Omneon Update:

On the company’s analyst call, CEO Patrick Harshman and CFO Carolyn Aver provided a detailed overview of the company, including the performance of Omneon.

Harshman reported that for the full third quarter, Omneon’s revenue was $30.3m, an increase of 30% versus the same quarter a year ago.  Omneon’s order intake during the quarter was $32.2m, were an increase of 16% versus the third quarter of 2009.

Omneon’s revenue for the first three quarters of 2010 was $90.5m, up 17% versus the same period in 2009.  Omneon’s year-to-date gross margins were 58%.

.

Harmonic – Omneon Synergies:

Harshman said that the company is realizing synergies between the two companies in four ways:

  • Sales: the company has now put in place a systematic way to cross-sell products, which is now happening

 

  • Products & solutions: the company says it is currently developing joint solutions

 

  • Organizational: the combined leadership team is in place, and all Silicon Valley employees have re-located to Harmonic’s new HQ.  Combination of regional offices is underway.

 

  • Financial: The company’s Q3 results show that the Omneon acquisition will strengthen Harmonics gross margins.  Harshman also said that the supply chain integration is complete and that the company believes it will achieve $8m – $10m in cost synergies by the 2nd half of 2011.

 .

Changes to Segmentation to Accommodate Omneon

Harmonic CFO Carolyn Aver reported that the company is changing the way it segments and reports revenue in order to better represent Omneon products and solutions.

On the product side, the company has added “production and playout” to the existing product categories (edge & access, video processing and services).   

On the customer segmentation front, Aver said that the company will add a new category called “broadcast, media and other,” and will combine “satellite” and “telco” into a single segment – the two had previously been reported separately.

.

Outlook:

The company is targeting Q4 non-GAAP gross margins of 50-52% on revenues of $127m – $132m.  The projected revenue excludes certain deferred revenue that would otherwise have been recognized by Omneon had the acquisition not occurred.

For the full year, the company is projecting revenue $412m – $417m; or $499m – $504m when taking Omneon into account for the full year.

.

You can read the full Harmonic earnings press release here.

You can read the full transcript of the analyst conference call here.

The slide presentation from the analyst conference call is here.

.

%d bloggers like this: