Opinion on  Harmonic Inc. (HLIT)     Sector: Technology  >  Industry: Communications Equipment
Harmonic Inc.

Guru: Paul McWilliams
Newsletter: Next Inning
Technology Research
BUY: Harmonic
(nasdsaq: HLIT)
HLIT is the only broad-line pure-play video
infrastructure company of meaningful size left
standing in the market today. The only other
pure-play of substance, Arris (ARRS), has virtually
nothing to offer in the way of head-end
equipment, which is and will continue to be the
most important and profitable side of the video
infrastructure business.
HLIT's three primary markets are cable,
satellite and the budding world of telecom
video or IPTV. As we all know, there is a war
raging between these three competing methods
for delivering TV programming. Fortunately
HLIT is positioned to help all three industries
capitalize on strengths and overcome weaknesses
and deploy emerging IPTV features that
will radically change the way we all view the TV
experience.
HLIT has also positioned itself to provide
critical transcoding technology to web based,
broadcast and the emerging content aggregation
video businesses. This opens exciting new
markets for HLIT, and also provides the technology
HLIT's traditional customer
base need.
At the end of 2005, HLIT
removed founder and CEO, Tony
Ley, and replaced him with Patrick Harshman.
During his short 28 months at the helm,
Harshman has reorganized operations,
reduced both fixed and variable operating costs
and completed two strategic acquisitions. As a
result, while revenues were up 26% year-overyear
in 2007, pro forma operating profits
soared 326% for the year. Add to this that
HLIT will soon report its seventh straight profitable
quarter and I think you have a success
story that Wall Street has yet to acknowledge.
KEY STATS:
Recent Price: $7.71
52 Week High: $12.95
52 Week Low: $7.40
Market Cap ($MIL): $790.50
2007 Revenues ($MIL): $311.20
2007 Net Income ($MIL): $23.42
2007 EPS: $0.28
2007 Gross Margin: 42.9
2008 Est. EPS: $0.69
2008 Est. P/E: 12.2
Dividend Yield (%): NA
Short Interest/float (%): 8.2
Forbes Gurus---25 Stocks, ETFs and Funds for the Second Half 2008
12
(nasdsaq: HLIT)

What The Brokers Say

Trades for 18-Jul-2008

Time	Volume / Share Price
16:00	7,915 @ $9.54       red colour
15:59	100 @ $9.55          red colour
15:59	100 @ $9.56          green colour
15:59	100 @ $9.56           green colour
15:59

Harmonic, Inc. designs, manufactures, and sells video products and system solutions that enable service providers to deliver broadcast and on-demand services. These broadcast and on-demand video services include high-definition television, video-on-demand, network personal video recording, and time-shifted TV. The company offers video processing products that comprise encoders, multiplexing solutions, stream processing products, and decoders and descramblers; and edge and access products, which include server gateways, transmitters and optical amplifiers, optical nodes and return path transmitters, and Internet protocol transmission equipment. Its management and control software products consist of NMX Digital Service Manager that gives service providers the ability to control and visually monitor their digital video infrastructure at an aggregate level; and NETWatch management system, which operates in broadband networks to capture measurement data and enables the broadband service operator to monitor and control the hybrid fiber-coax transmission network from a master headend or remote locations. In addition, Harmonic provides various application software products that comprise ClearCut software, which provides operators with digital storage of real-time broadcasts for on-demand services; ProStream 8000 solution that allows operators to present on-screen mosaics with certain channels tiled within a single video stream; and Armada and Streamliner products for the management of an operator’s video-on-demand assets and the distribution of these assets to subscribers. Further, it offers consulting, implementation, and maintenance services. The company sells its products to various broadband communications companies through its own direct sales force, as well as independent distributors and integrators in the United States and internationally. Harmonic was founded in 1988 and is headquartered in Sunnyvale, California.
www.harmonicinc.com