News

Customer Return Hammers Harmonic

11/19/2000 7:00 PM Eastern

Troubled Harmonic Inc. restated its third quarter earnings results after a domestic customer returned $4.1 million worth of products.

In a statement at the Securities and Exchange Commission, Harmonic said it would restate quarterly revenue to $68.2 million from $72.3 million and revised the pro forma net loss to $5.5 million, or 10 cents per share, from 8 cents per share.

Harmonic's Broadband Access Networks division, which makes fiber-optic products used extensively in broadband cable networks, reported revised revenue of $40.4 million for the quarter, down from $53.2 million the previous quarter. The sequentially lower BAN revenue levels reflect slower sales across Harmonic's worldwide base of cable customers, the company said in a statement.

Harmonic's stock price fell $1.13 in early trading Nov. 14, to $13.13.

Harmonic would not identify the customer, but some analysts believe it is RCN Corp.

According to the filing, Harmonic accepted the return in order to "maintain its ongoing relationship with the customer."

Harmonic also said the customer "recently informed the company of a decision to reduce significantly the scope and delay the timing of certain network construction projects."

Josephthal & Co. Inc. analyst Lawrence Harris said that he suspected the customer was RCN because the cable overbuilder has hinted to Wall Street analysts that it is taking another look at its capital spending plans.

RCN was Harmonic's largest customer in the June quarter, representing about 12 percent of sales.

RCN officials did not return a call seeking comment.

Harris doubted AT&T Corp., another big Harmonic customer, was the culprit, mainly because Harmonic said earlier this month that shipments to AT&T have resumed.

Harris remained cautiously optimistic about Harmonic.

"The company has certain issues," Harris said. "In the case of AT&T, shipments have resumed but we're not looking for a major resumption. I would see the company [Harmonic] reporting soft results in the December 2000 quarter, the March 2001 quarter and perhaps the quarter after that. We're not looking for a quick turnaround."

Harmonic stock also got hammered last month after it reported results well short of analysts' expectations.