Why Harmonic Shares Hit the Wrong Note

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Harmonic (NASDAQ: HLIT  ) are down 8% today after dropping as much as 10% in early trading. The market reacted poorly to a mixed earnings report Harmonic issued last night, which offered underwhelming performance as well as little to get excited about for the current quarter.

So what: Harmonic's fourth-quarter revenue of $133.4 million was weaker than the $137.5 million expected, and the Street seems to have fixated on this underperformance rather than the $0.09 in adjusted EPS, which was a penny better than the consensus. For the current quarter, Harmonic expects revenue in the range of $115 million to $125 million, which comes in below the $133.3 million consensus estimate.

Now what: In last night's conference call, CFO Carolyn Aver pointed out that the first quarter's lowball estimate is the result of factors that aren't expected to carry through the full year. However, that doesn't excuse the company from having now issued five consecutive quarters of guidance anticipating year-over-year declines, in the words of Jefferies analyst James Kisner. Since this isn't an aberration, it may make more sense to watch this company instead of jumping in today. Nothing currently indicates that Harmonic is on the verge of a turnaround.

Want more news and updates? Add Harmonic to your Watchlist now.

2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2225451, ~/Articles/ArticleHandler.aspx, 8/20/2014 8:26:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement