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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.

September