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Harmonic Inc. | $HLIT Stock | Shares Drop On Lower Than Expected Earnings And Revenue Numbers

Nov. 10, 2016 8:14 AM ETHLIT
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Harmonic Inc. (NASDAQ: HLIT)

Harmonic Inc. (NASDAQ:HLIT), a global video infrastructure products and system solutions yesterday reported their third quarter 2016 financial results. Harmonic reported third quarter adjusted earnings of $0.01 per share which fell short of analyst expectations of $0.02 per share. Harmonic reported third quarter revenues of $101.4 million which fell short of analyst expectations $107.1 million.

Harmonic Inc. CEO's Comments

"Our third quarter results reflect our ongoing business transformations, as Cable Edge segment revenue declined in advance of the pending release of our new CableOS products," said Patrick Harshman, President and CEO of Harmonic. "Although our outlook for fourth quarter Cable Edge spending is therefore cautious, our recently executed warrant agreement with Comcast and our first CableOS revenue shipments bolster our confidence in our CableOS growth strategy. Turning to our Video segment, our transformational VOS™ offering drove a stronger-than-forecasted mix of software- and services-related orders, impacting third quarter revenue recognition while maintaining near-record backlog and deferred revenue. We are encouraged by the competitive momentum of our transformational initiatives, and remain focused on revenue growth, improving profitability and enhancing shareholder value." Market Wired

HLIT Technical Analysis

HLIT opened trading yesterday at $4.80 which was down from the previous day's trading close of $4.95. HLIT closed trading yesterday at $5.35 and crashed down after market to $4.30, equivalent to a 20% decrease from the closing price. Taking a look at the daily chart we can see the last time HLIT traded below these levels we have to go back to August 24th when it traded at $4.19. Taking a closer look at the daily chart we can see that before the spike down HLIT had already been in an overall downward trend dating back to October 5th when it traded at $5.93. HLIT has a float of 69.02 million shares and traded below the normal daily trading volume on Wednesday. For trading purposes, I would like to see HLIT open trading on Thursday below $4.65 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.20 from my entry position fearing anything more than that and the stock would start to fill in the gap down.

Company Profile

Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions worldwide. Its products enable customers to create, prepare, and deliver a range of video and broadband services to consumer devices, including televisions, personal computers, laptops, tablets, and smart phones. The company operates in two segments, Video and Cable Edge. The Video segment sells video processing, and production and playout solutions and services to cable operators and satellite and telecommunications Pay-TV service providers, and to broadcast and media companies, including streaming new media companies. Its video processing solutions include network management software and application software and hardware products, such as broadcast and distribution encoders, contribution encoders, multiscreen transcoders and stream processing products, content preparation and delivery for multiscreen applications, decoders and descramblers, and management and control software. This segment’s video production platforms consist of video-optimized storage and content management applications, which provide broadcast and media companies with file-based infrastructure to support video content production activities, such as editing, post-production, and finishing; and video playout solutions, including media orchestration software, are based on scalable video servers used by broadcast and media companies to create and playout television channels. The Cable Edge segment offers cable edge solutions and related services, including Narrowcast Services Gateway products primarily to cable operators. In addition, the company provides technical support and professional services, such as program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training. Harmonic Inc. was founded in 1988 and is headquartered in San Jose, California. Yahoo Finance

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