Harmonic Offers Mixed Bag In Q1
Video and broadband technology firm Harmonic offered a mixed bag in the first quarter as rising demand among U.S. customers was matched with softer sales in Europe.
The company posted a first quarter net loss of $5.4 million, or 6 cents per share, on revenues of $108 million, versus $101.7 million in the year-ago period. Comcast, representing 20% of revenue, was Harmonic’s sole 10%-or-greater customer in the period.
Wall Street analysts were expecting sales of $112.5 million, Raymond James analyst Simon Leopold said in research note. He said harmonic’s second quarter sales projections of between $113 million to $123 million were in line with consensus for sales of $118.9.
Backlog and deferred revenue was $126.4 million as of March 28, versus $114 million as of December 31, 2013.
“Our first quarter results reflect increased demand in the US, offset by softer performance in Europe," said Patrick Harshman, Harmonic’s president and CEO, in a statement. "Bookings grew 15% year-on-year, and an improved margin trend across all products drove blended gross margin above our expected range.”
On Tuesday’s earnings call, Harshman said U.S. and international revenues were split, with cable contributing 41%, followed by broadcast and media (34%) and satellite and telco (25%).
A bright spot was Harmonic’s edge business, which was up 40% and includes the NSG Pro, the vendor’s evolving Converged Cable Access Platform (CCAP), which is starting off as a super-dense, downstream-only edge QAM. Phase II of that product will integrate upstream and cable modem termination system (CMTS) capabilities.
Harshman said Harmonic expects the more complete version of the NSG Pro to be in customer labs later this year, and to reach commercial availability sometime in 2015.
Harmonic will be facing off with Arris, Casa Systems, Cisco Systems and CommScope in the CCAP market, along with newcomer Gainspeed, which is developing a “virtual” CCAP with partners that include CommScope and Juniper Networks.
Despite Harmonic’s optimism for growth tied to CCAP and new encoding system for 4K video, Leopold said he believed 2014 will “be a tough year” for Harmonic to deliver mid-single digital growth, believing that the early phase of CCAP will favor integrated solutions offered by competitors and incumbent CMTS suppliers, and that the encoding sector faces a pause prior to the adoption of Ultra HD.
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