Harmonic Casts a Cautious Eye on '09
Harmonic Inc. (Nasdaq: HLIT) posted solid third-quarter numbers, but the digital video specialist said broad economic concerns have caused it to temper enthusiasm as it tries to gauge what to expect next year.
"Looking ahead to 2009, the global economic environment clearly creates some uncertainty, [but] we are convinced the fundamental market and the trends toward more video being delivered in more formats over more devices over more networks by competitor operators remain in force," Harmonic president and CEO Patrick Harshman said Monday during the company's earnings call.
As for the quarter already in the books, Harmonic posted net sales of $91.5 million, up 11 percent from the year-ago quarter, with GAAP net income of $12 million, versus $9.4 million a year ago. Harmonic ended the period with cash and cash equivalents of $293.4 million, up from $288.2 million in the previous quarter. (See Harmonic Posts Q3.)
Cable remained Harmonic's primary breadwinner, accounting for 63 percent of revenues, followed by satellite (22 percent) and telcos and "other" customers (15 percent).
Citing decent bookings, Harmonic chief financial officer Robin Dickson said the company would hold to the high end of its second-half revenue forecast (between $175 million to $185 million), with fourth-quarter net sales slated to be in the range of $92 million to $95 million. "Beyond the fourth quarter, the picture is less clear," Dickson added.
That's because most of Harmonic's customers are currently reassessing their capital expenditure plans for 2009 in light of uncertain economic conditions.
"Let me be clear, it is not that we have received negative or concerning news," Harshman later clarified. "This is the time of the year where many or most of our customers are actually engaged in setting… capital budgets for 2009."
But, considering the broader economic situation, "I think we have reason to be perhaps a little bit more slow in terms of coming out with our estimates of what is going to happen in 2009," he added.
Comcast Corp. (Nasdaq: CMCSA, CMCSK), one of Harmonic's largest customers, is scheduled to report third-quarter figures Wednesday morning.
As for future growth drivers, Harshman pointed to demand for Harmonic's universal edge QAM products, which provide capacity for multiple types of cable services, including broadcast digital video, video-on-demand, IPTV, and even downstream high-speed Docsis traffic in "modular" cable modem termination system (M-CMTS) configurations. (See Universal Edge QAM Market Heats Up.) Among those applications, Harmonic is seeing substantial edge QAM activity centered on M-CMTS deployments and expansions of "traditional" VOD services, Harshman said.
— Jeff Baumgartner, Site Editor, Cable Digital News