Harmonic Stock Hits Sour Note

8/01/2008 8:00 PM Eastern

Harmonic shares nose-dived — down 19% or $1.83 — to $7.81 each last Tuesday after the cable equipment vendor offered weak second-half sales guidance.

Harmonic released second-quarter results after market close on July 28, reporting revenue of $89.3 million (up 25% from $71.3 million last year) and net income that more than quadrupled to $25.5 million (27 cents per share) in the period, up from $6.2 million (8 cents per share) in the previous year. Sales for the first half of the year were equally strong, up 25% to $176.6 million, reflecting increased shipments to cable, satellite and telco customers, the company said in a statement.

But Harmonic's forecast for the second half of the year sent the stock into a tailspin. Harmonic estimated second-half sales of $175 million to $185 million, putting its full — year revenue estimates at between $351.6 million and $361.6 million, slightly below analysts' consensus of $362.5 million.

The stock continued to decline on July 30 — closing at $7.68, down 13 cents, or 2% — despite some analyst reports that called for calm.

Jefferies & Co. tech analyst George Notter and Avondale Partners analyst Blair King maintained “buy” and “market outperform” ratings on the stock, respectively, with both analysts calling the second half guidance overly conservative.

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