Valens Equity Weekly Insights - 2023 10 17
Harmonic (HLIT) has been transitioning its business away from traditional broadcasting end markets towards the streaming and cable broadband markets. Uniform Accounting highlights that the market is missing the economics of Harmonic's new business lines, indicating equity upside.As Harmonic grows its industry leading vCMTS software to be the best-in-class broadband routing solution, it is poised to exponentially grow its profitability. The market is overly focused on the company's shrinking broadcasting business. Harmonic is replacing its broadcasting business with its higher profitability streaming customers, and as it continues shifting towards these high profitability verticals, profitability should continue improving.
Harmonic's management is closely aligned to focus on metrics that will incentivize margin expansion and improved shareholder returns, which should drive profitability higher than the market expects.
Management confidence in the Q2 earnings call about its growth in Broadband and its transformation of its Video segment suggest management is positioned to execute above market expectations.
HLIT
Harmonic provides video delivery software, products, system solutions and services that enable its customers to create, prepare, store, playout and deliver a range of broadcast and over-the-top video services to consumer devices. The company has two segments, Video and Cable Access. The Video business sells video processing and production and playout solutions and services worldwide to cable operators and satellite and telecommunications (telco) pay-TV service providers, which it refers to collectively as service providers. The Cable Access business sells cable access solutions and related services, including its CableOS software-based cable access solution, primarily to cable operators globally.
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