Harmonic to Buy Internet-Video-Transcoding Firm

Spends $15.5M in Cash and Stock for Rhozet

By Todd Spangler -- Multichannel News, 7/26/2007 8:36:00 AM

Harmonic plans to acquire Rhozet, a developer of video-transcoding software for Internet and mobile applications, for $15.5 million in cash and stock.

Privately held Rhozet claims to have more than 100 customers, including Amazon.com, British Telecommunications, CBS, ESPN, MSN, Motorola, MTV Networks, Sony, TiVo, Comcast's thePlatform, The Weather Channel and Yahoo.

Harmonic said the addition of Rhozet's transcoding software will let its broadcast, cable, satellite and telco customers create and deliver high-quality Internet- and mobile-video programming. The deal will also expand Harmonic's presence in Internet-video services.

"Viewers are increasingly turning to the Internet and mobile devices to watch an ever-expanding range of video content," Harmonic CEO Patrick Harshman said in a prepared statement. "Rhozet's software-transcoding technology is a natural extension to Harmonic's market-leading IP-enabled [Internet protocol] compression and on-demand solutions, and we believe our combined solutions will make it possible for service providers to deliver superior-quality video to virtually any device."

Harmonic expects the deal, announced Wednesday, to close by the end of July subject to customary closing conditions.

According to Rhozet -- pronounced “roh-zet” -- its name is derived from the Rosetta Stone and the Greek letter “rho." The company is based in Santa Clara, Calif., with European headquarters in Hohenbrunn, Germany.

Also Wednesday, Harmonic announced earnings for the quarter ended June 29. It reported net sales of $71.3 million, up 34% from $53.3 million in the second quarter of 2006. Net income for the quarter was $6.2 million compared with a net loss of $2.9 million in the year-ago period.