Harmonic, Inc. (
Q3 2010 Earnings Conference Call
October 28, 2010 5 PM ET
Carolyn Aver – CFO
Patrick Harshman – President and CEO
Amir Rozwadowski – Barclays Capital
Chris - RBC Capital Markets
George Notter - Jefferies
Blair King - Avondale Partners
Victor Chiu - Morgan Keegan
Nicos Theodosopolis (ph)
Previous Statements by HLIT
» Harmonic Inc. Q2 2010 Earnings Call Transcript
» Harmonic Inc. Q1 2010 Earnings Call Transcript
» Harmonic Inc. Q4 2009 Earnings Call Transcript
» Harmonic, Inc. Q3 2009 Earnings Call Transcript
Good afternoon. My name is Jeremy and I will be your conference operator today. At this time I would like to welcome everyone to the Harmonic third quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. (Operator Instructions) Thank you. Miss Carolyn Aver, you may begin your conference.
That you Jeremy. Hello everyone, I’m Carolyn Aver, the CFO of Harmonics Thank you for joining us today. With me at our headquarters in San Jose, California, is Patrick Harshman, our CEO.
I’d like to point out that in addition to the audio portion of this call; we have also provided slides which you can see by going to harmonicinc.com and clicking on the third quarter earnings call in the events section of the front page.
Turning to slide two, let me remind you that during this call we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We must caution you that such statements are only predictions and that actual events or results may differ materially. We refer you to documents that Harmonic files with the SEC including our most recent 10-K and 10-Q reports. These documents identify important risk factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.
Please note that on this call we will provide you with financial metrics determined on a non-GAAP or pro forma basis. These items, together with the corresponding GAAP numbers, and reconciliation to GAAP are contained in today’s earnings press release which we have posted on our website, and filed with the SEC on Form 8K.
We will also discuss historical financial and other statistical information regarding our business and operations. Some of this information is included in the press release, and the remainder of the information will be available in a recorded version of this call on our website.
With that, let me turn the call over to Patrick.
Thank you very much Carolyn and thank you all for joining us today. Turning to slide three, let me begin by saying we’re extremely pleased with the way our business is performing. Our total revenue for the third quarter was $104.8 million, which includes $5.6 million of Omneon revenue. Omneon contributed just over two weeks to our operating results in the third period.
Excluding Omneon’s contribution, we had net revenue of $99.2 million, up 18 percent year over year. Non-GAAP earnings were $0.09 for the quarter, up from $0.05 a year ago, and Omneon’s contribution was EPS neutral.
Harmonic only bookings during the third quarter were $97.5 million, up 22 percent from a year ago, and Omneon standalone bookings were $32.2 million, up 16 percent from a year ago. So not only has Omneon’s business continued to perform very well, we’re making excellent progress on integrating the company, and our customers around the world continue to be very enthusiastic about the combination.
The key market dynamics underlying both Harmonic and Omneon results remain in force. We see increasing investment in high definition services worldwide, across all customer segments and Harmonic has never been better positioned to take advantage of this growing HD opportunity.
Additionally, while HD is the main locomotive driving business today, we continue to be encouraged by our success in expanding our customer base, particularly in international markets, and in establishing a leadership position in providing technology enabling new media services.
So let’s now move to slide four where we’ll take a closer look at how the market transition to HD continues to create a range of growth opportunities for Harmonic. In the U.S., we see our customers driving towards all HD for live and on-demand services. In international markets, new HD deployments are starting to accelerate in many geographies.
We also see growing worldwide interest in newer HD technologies including 1080P60, 3D, and even newer 4K encoding. We’re pleased to see this continuing HD wave driving our customers to invest in the preparation and delivery of HD services, including our new Omneon customers who are increasingly using our Spectrum and Media Grid solutions to optimize their HD production, play out and storage work flows.
We also recently announced that demand for HD encoding has resulted in over 10,000 of our Electra 8000 encoder channels being shipped, a really amazing result since the introduction of that product in the summer of 2009.
HD is also becoming the preferred format for video on demand services, driving demand for our very exciting Hecta QAM solution which began shipping during the quarter.
Delivering this increasing live and on-demand HD content is putting tremendous bandwidth pressure on access networks. In response to this bandwidth squeeze, our customers are also investing in a range of bandwidth technologies.
Across our customer base, we’re seeing a whole new encoder upgrade cycle where our latest generation HD and SD encoders are being purchased to replace existing encoders, opening up bandwidth for new HD content through improved compression of the existing channels.