Harmonic Inc Scoops up Scopus
Definitive agreement to buy Scopus and a quick review.
$5.62 in cash for each outstanding share of Scopus, representing an enterprise value of approximately $51 million, net of Scopus’ cash and short-term investments. …is expected to close in the latter part of Q1.
Q3 2008 Results and the earnings transcript.
Excellent earnings growth.
Lots of growing cash, being sensibly deployed I hope, fingers crossed. The Scopus (SCOP) purchase represents around 17% of cash at end of Q3 293.41M
I own Harmonic as does Fusion Portfolio. This video on demand (VOD) pig gets to continue to feed at my trough. I like HLIT considerably more than ALVR, my other emerging communication investment. Harmonic are investing in a fundamental concept, a wave of video on demand, while Alvarion invests in one technology within a wave. As such the risk/reward for HLIT is considerably better.
Earnings are lower next year due to new mid thirties tax rate as NOL’s are all but used up. Actually cash tax will be around 2/3s or more of that amount. To the casual eye and computer screen earnings growth is slowing, to my eye it the growth in intact, the inevitable tax is now paid.
That leaves us with estimates for 2008 of 0.67 falling to 0.56 in 2009. Cash flow is good and excellent cashed up balance sheet. The VOD wave is just beginning and while technology and software always face risks, Harmonic is increasing it’s competitive position from a position of strength.
I said fingers crossed ealier as because until I know the management and the company I am never really sure of their competence. 50% of managers are worse than average!
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