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Video hardware

Harmonic's Mobile Video Marriage

Harmonic Inc. (Nasdaq: HLIT) has put up $15.5 million in cash and stock to acquire Rhozet Corp. , a closely held maker of transcoding video software for mobile applications.

Harmonic said the deal will broaden its digital video portfolio and help its broadcast, cable, satellite, and telco customers distribute video across a range of formats, including mobile handsets and other Internet-connected devices.

Santa Clara, Calif.-based Rhozet claims that more than 100 customers use its transcoding system, including Amazon.com, ESPN, MTV Networks, Yahoo Inc. (Nasdaq: YHOO), The Weather Channel, and thePlatform Inc. , a media publishing specialist Comcast Corp. (Nasdaq: CMCSA, CMCSK) acquired last year.

Rhozet's product line includes the "Carbon Coder," a stand-alone software transcoding application, and the "Carbon Server," a distributed transcoding management app.

"We see a great opportunity to marry this technology with our solutions to provide our cable, satellite, IPTV, and broadcast customers with the ability to seamlessly integrate Internet and user-generated video into their on-demand service platforms," said Harmonic president and CEO Patrick Harshman Wednesday afternoon during the company's earnings call. (See Harmonic Posts Higher Q2 Sales.)

Harmonic expects to close the deal within a week, and for the transaction to be neutral on earnings per share for the remainder of 2007. Rhozet has been shipping product for just over a year.

"We're still sorting out the revenue accounting" on the acquisition, Harmonic CFO Robin Dickson said Wednesday on the same call. "I think it's just too small at this point... to have any really meaningful impact from a financial perspective."

"The numbers are small, but growing quickly," Harshman added, noting that Harmonic plans to integrate Rhozet into the company's line of digital video systems, which include high-end encoders.

— Jeff Baumgartner, Site Editor, Cable Digital News

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