Harmonic is to sell its Cable Access business to Aurora Networks for $46 million in cash. Harmonic will use $35 million of the proceeds for its stock repurchase programme.
“The sale of the Cable Access business enables us to sharpen our focus on our largest growth opportunities,” said Patrick Harshman, President and Chief Executive Officer. “Cable Access was Harmonic’s lowest margin product line, and through this transaction and the increase in our authorized share repurchase program, we will continue to drive growth in our core markets, expand our gross margin, reduce our outstanding shares, and position our business for stronger long-term earnings.”
Harmonic says the decision to divest the Cable Access business reflects its commitment to the Video Production and Playout, Video Processing, and Cable Edge product areas, where it currently holds market share leadership. In contrast, Harmonic is not the market leader in the Cable Access product area, and there is limited strategic synergy between Cable Access and the Company’s other higher growth product lines. The Cable Access portfolio includes optical transmitters, amplifiers, receivers and nodes. Given Harmonic’s longstanding relationship with its customers in the Cable Access business, Harmonic is very pleased to work with Aurora Networks because of its scale, strategic focus and commitment to customer care.
The Cable Access business generated $52.9 million of net revenue with gross margin of approximately 30 per cent in calendar year 2012. Harmonic expects that the sale of the business will be neutral to diluted earnings per share for 2013, excluding the impact of the share repurchase programme.