But will the market for HEVC encoding and cable's new access platform ramp up fast enough for the vendor to turn in a rosy 2013?

Jeff Baumgartner, Senior Editor

January 30, 2013

2 Min Read
Harmonic Banks on UltraHD & CCAP

Harmonic Inc. sales dipped in the fourth quarter thanks to slower cable spending and weakness in Europe, but the vendor believes better days are ahead as it prepares to take advantage of two service provider growth areas -- UltraHD and the Converged Cable Access Platform (CCAP). Cable represented 45 percent of revenue in the quarter as Harmonic completed big orders that were placed earlier in 2012. It marked the cable's smallest contribution in 2012, with Comcast Corp. falling off of Harmonic's list of 10 percent-or-greater customers during the period, according to Raymond James Financial Inc. analyst Simon Leopold. Despite issues in Europe, Harmonic's international customers still represented 62 percent of revenues ($82.6 million), which was a record, fueled by gains in Asia, Latin America and other emerging markets. Harmonic earned 9 cents per share on revenues of $133.4 million, both numbers meeting analysts' expectations. But Harmonic expects first-quarter sales of $115 million to $125 million, off from the $133.3 million expected by analysts. Growth engines
On Tuesday's earnings call, Harmonic CEO Patrick Harshman identified Ultra HD encoding and cable's CCAP transition as significant growth markets that the vendor will focus on, though they aren't expected to pick up much stream from a revenue-generating standpoint until later this year. Harmonic is investing heavily in a CCAP platform that will compete with Arris Group Inc., Cisco Systems Inc., Casa Systems Inc., CommScope Inc. and perhaps Motorola Mobility LLC (though it will depend on what Arris does with Moto's CCAP platform once it completes the acquisition of Moto's Home business). Estimates vary, but CCAP, a super-dense architecture that will allow cable to put all of its services on the same platform, is expected to represent a $2 billion a year market. (See Sizing Up the CCAP Players and Harmonic Goes All-Out for CCAP.) Harshman said the vendor's first-generation CCAP is in tests with "five Tier 1 customers." Sales on that product could start in the second half of 2013. Harmonic is also anticipating a refresh cycle for video coding equipment as operators begin to adopt High Efficiency Video Coding (HEVC)/H.265, a new codec that promises to be 50 percent more efficient than H.264/MPEG-4 and play a big role in both UltraHD/4K video and mobile video services. (See ITU Blesses Bandwidth-Saving Video Codec.) "We believe this broad upgrade cycle will begin to play out beginning in the second half of 2013" in preparation for events such as the 2014 World Cup, Harshman said. While Harmonic envisions a healthy 2014, Harshman's still not ready to predict overall growth this year, at least not just yet. "It really depends on to what extent a couple of these things [CCAP and HEVC upgrades] take off in the back half of the year," he said. — Jeff Baumgartner, Site Editor, Light Reading Cable

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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