With its focus now on the cable industry's transition to next-generation virtualized DOCSIS 4.0 networks, San Jose, California-based tech vendor Harmonic has received what it says are several purchase offers for the video side of its business and it’s evaluating a possible sale.
“Due to changes in the marketplace and our customer strategies, synergies between our broadband and video businesses are now less compelling,” Harmonic CEO Patrick Harshman told equity analysts Monday during the company's third-quarter earnings call. (Seeking Alpha has a full transcript of the event here.)
“Additionally, we have received interest from several external parties for our video business,” Harshman added. “These factors coupled with capital allocation planning led us to initiate the strategic review. Together with financial and legal advisers, we're assessing a range of alternatives for the video business with a clear goal of optimizing long-term value. Walter will provide additional color momentarily.”
No timeline for the review was revealed.
For the third quarter, Harmonic reported revenue of $127.2 million, with sales down for both its video and broadband operations.
Video represents about 40% of the company's overall business, with Q3 sales of $51.4 million representing a 19.5% year-over-year downtick. However, sales of the company’s cloud-based SaaS (software as a service) solutions for streaming companies were up 42% to $12.5 million.
“With live sports still in the early innings of migrating to streaming platforms, we believe there are substantial runway for growth in our video SaaS,” Harshman said.
Meanwhile, as Comcast and Charter Communications roll out major modernizations to their networks, the CEO added that Harmonic is “uniquely positioned for a sustained period of network investment.”
The company reported a 17.5% decline in Q3 broadband segment revenue to $75.8 million, a decline Harshman said was expected with cable operators “bleeding down” accumulated inventories of DOCSIS 3.1 technology.
But with 104 operators around the world deploying Harmonic's cOS solution for virtualized networks (formerly known as CableOS), Harshman said the company has “significant footprint expansion opportunity still in front of us.”
Harmonic shares are up more than 10% since Monday’s earnings report.
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!