Harmonic Inc. is selling off its cable access business to Aurora Networks Inc. for US$46 million, a move that will help Harmonic focus on higher-margin products, including video processing gear, edge QAMs and its budding Converged Cable Access Platform (CCAP).
The product line Harmonic is selling off primarily involves outside plant equipment, including optical transmitters, amplifiers, receivers and nodes. Harmonic said cable access was its lowest gross margin product line (30 percent) and generated $52.9 million in net revenues for 2012.
Harmonic's board has approved a $35 million share repurchase program that is contingent on the close of the deal, which is expected in the current quarter. It was not immediately known how many Harmonic employees will be joining Aurora.
Why this matters
For Harmonic, the sale will let it sharpen its focus on product areas where it believes it has the most sizeable opportunities. During its fourth-quarter earnings call last month, CEO Patrick Harshman identified two key areas for growth: UltraHD encoding and CCAP, a next-generation cable access platform that will combine the edge QAM and cable modem termination system (CMTS) functions and prepare MSOs for an all-IP service transition. Harmonic says its first-generation CCAP product is in tests with at least five Tier 1 customers, with sales expected to start in the second half of 2013.
For privately held Aurora, meanwhile, the deal should complement its own product line, and continue a recent string of acquisitions that has helped the company fill in gaps in its broadband access portfolio and expand its stable of customers. (See Aurora Buys Piece of Enablence.)
â€” Jeff Baumgartner, Site Editor, Light Reading Cable