Harmonic looking at sale of video business

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Video technology outfit Harmonic is considering a sale of its video business after posting a sharp drop in revenue and a loss of US$6.5 million in the third quarter. The technology company said it had received expressions of interest in the business from several parties.

The company said it had launched a strategic review of the video business after looking at the growth potential of its broadband and video software-as-a-service lines, which it said may or may not result in a sale of the video unit.

“After careful consideration of the growth opportunities in both our Broadband business and Video SaaS business, and our capital allocation priorities over the next several years, we have initiated a formal strategic review process for our Video business. Together with financial and legal advisors, we are assessing a range of alternatives for the Video business to better position Harmonic for long-term shareholder value creation. As part of this process, we have received indications of interest in our Video business from a number of parties over the past several months. Since the strategic review may cause some disruption to the business, we are conservatively guiding our Video business for Q4 2023,” the company said.

Harmonic said that “no timetable has been established for the completion of the review”.

Synergies ‘less compelling’

In a conference call, CEO Patrick Harshman said “changes in the marketplace and our customer strategies” meant that synergies between the broadband and video businesses were “less compelling”.

He said that this, combined with expressions of interest from potential buyers and the company’s capital allocation priorities, had led the company to initiate the review.

He said the broadband business was “on track for multiyear growth” and the video business continued to deliver growth, with more expected as live sports migrates to streaming.

Harshman said that the video SaaS business delivered growth of 42% despite a decline in the appliance side of the video business, as the business moved to a SaaS model.

He said the long-term prospect in broadband strong, driven by interest in DOCSIS 4.0 along with growth from fibre-to-the-home.

Harmonic posted revenues of US$127.2 million for the quarter, down from US$155.7 million last year, Broadband and video revenue both declined, with the broadband segment falling from US$91.9 million to US$75.8 million, and video falling from US$63.8 million to US$51.4 million.

Harmonic posted a net loss of US$6.5 million compared with a profit of US$8.7 million last year.

As a result of the review, the company has moved its analyst day to early next year from late 2023.