Light Reading
Harmonic is eager to exit its declining, low-margin cable access business. So, why is Aurora so keen to snap it up?

Aurora's Value Proposition

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
2/19/2013
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While Harmonic Inc. is quite eager to sell off its shrinking cable access business, Aurora Networks Inc. is likewise excited to pick it up, claiming that the deal will help to accelerate the growth of its still-expanding cable access unit. (See Harmonic Sells Cable Access Unit for $46M.) On a call Tuesday to discuss the deal, Harmonic President and CEO Patrick Harshman said it no longer made sense to hang onto that business, which now offers "little strategic synergy" with the rest of Harmonic's portfolio of video processing gear, edge QAMs and other gear designed to help service operators pursue IP and multi-screen video transitions. Aurora VP of Marketing John Dahlquist says Aurora's optical transmission business is about four times the size of Harmonic's and acknowledged that there's "quite a bit of product overlap." And Aurora plans to keep it all. But it's not really about the portfolio. Aurora is excited about Harmonic's installed base, which includes customers and global markets that Aurora historically hasn't had the resources to pursue. Harmonic, for example, has been strong in the U.K. at accounts such as Virgin Media Inc. (on the way to becoming part of Liberty Global Inc.), so this will give Aurora an entrée into that market segment, alongside more business with U.S. MSOs such as Comcast Corp. and Cox Communications Inc. And there's the node business. Harmonic and Aurora each have similar installed bases of 100,000 to 200,000, according to Dahlquist. Aurora is cooking up a new platform that bakes the QAM in the node itself, and essentially pushes that capacity even further out on the edge of the network. Aurora's behind on that project, due in part to a bad board spin, but expects to have field trials underway by the second quarter. "Strategically, the node is important to our long-term growth," Dahlquist says. Harmonic has about 70 employees tied up in the business that Aurora is acquiring, and has agreed to provide Aurora with "transition services" for up to five months. Aurora has not committed to taking them all, but will be having those conversations in the coming weeks. "It's too early to tell" how many Harmonic employees will join Aurora," Dahlquist says. "It will be up to them in many cases." The good news for those who decide to stay on is that they likely won't have to move. Aurora's headquarters in Santa Clara, Calif., and Harmonic's in San Jose make them virtual neighbors. — Jeff Baumgartner, Site Editor, Light Reading Cable

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