|Written by GSCR Staff|
|Friday, 15 March 2013 08:53|
Good morning! We are excited about the weekend as March Madness has officially started with conference tournaments. The madness continues on Wall Street with this running of the bulls.
Harmonic Inc. (NASAQ – HLIT - $5.83) is a unique play on the communications industry where the company designs and manufactures video infrastructure products and system solutions to broadcast and on-demand video services for televisions, personal computers, tablets, and mobile devices both domestically and internationally. The company offers a variety of content delivery systems for a multitude of media, broadcast encoders, video-optimized storage, and several other hardware and software solutions. It provides full technical and professional services for all products.
Harmonics announced earnings for 4Q12 and FY12. The company missed on 4Q12 revenue but beat EPS by a penny. More importantly the company turned the corner after at least three straight quarters with negative or close to zero profit. Additionally, the company divested the Cable Access product line to Aurora Networks, Inc. for $46 million, a deal which will be complete by the end of 1Q13. This business represented the slowest growth combined with the lowest margin for the company. The company continues to streamline and focus higher growth potential.
Harmonic continues to grow its Video Production and Playout, Video Processing, and Cable Edge products. Recently, Norwegian operator GET implemented a total solution package from HLIT for its IPTV, cable, and OTT multi-screen services incorporating Harmonic’s video infrastructure solutions. In January the company completed a deal with Eutelsat communications in the sale of its ProStream 1000 ACE stream processing and transcoding solutions to optimize bandwidth allocation for its direct-to-home (DTH) service in Africa.
The stock has been trading on heavy volume averaging over half a million shares per trading session over the last three months. The EMA and Fibonacci analysis indicate a very bullish trend in the short term as HLIT continues to climb from its $4.00 low in mid November back to the early 2012 highs near $7.00. We think all the factors mentioned above drive the stock to that $7.00 level.
Have a great weekend!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com