Harmonic Shares Plunge After Q1 Sales Miss
Video-Equipment Vendor Posts 22% Year-over-Year Revenue Decline
Todd Spangler -- Multichannel News, 5/5/2009 2:00:39 PM
Shares of Harmonic were down more than 21% on Tuesday, after the video-equipment vendor reported first-quarter sales well below expectations.
For the quarter ended April 3, Harmonic reported net sales of $67.8 million compared with analyst expectations of $75.2 million. Sales were down 22% from $87.3 million in the first quarter of 2008. The company said the lower-than-anticipated net sales were the result of "continuing weakness in the customer order rate across many different markets" in the period.
Harmonic's share price was at about $6.10 each in midafternoon trading, down from $7.73 each at market close Monday.
However, the company said sales volume appears to be trending back up in the current quarter. "Heading into the second quarter, we are seeing some signs of improving customer spending as well as positive customer response to our newest products," Harmonic president and CEO Patrick Harshman said in a statement.
Harmonic's major U.S. customers include Comcast, Time Warner Cable, Cox Communications, Cablevision Systems, Charter Communications and DirecTV.
For the second quarter of 2009, Harmonic said, it expects net sales to be between $72 million and $78 million, with operating expenses expected to be between $38 million and $39 million.
The company reported a first-quarter net loss of $18.8 million, which included charges totaling $11.9 million, primarily related to the acquisition of Scopus Video Networks, compared with net income of $13.4 million for the same period of 2008.
Jefferies & Co. analyst George Notter, in a research note Tuesday, said Harmonic's first quarter was "ugly" but said that cable operators were a relative bright spot in the quarter. "The softness among satellite, broadcast, and telcos was more significant," he wrote.
Notter maintained his "buy" rating on Harmonic shares.
"On the positive side, we still believe in the fundamentals around Harmonic's business longer term," he said. "The video infrastructure market should be a relatively strong area of investment given the competitive environment between/among operators."
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