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Harmonic Announces Third Quarter Results; Expecting Strong Sales and Earnings Growth in Fourth Quarter

10/21/2004 4:01:00 PM


SUNNYVALE, Calif., Oct 21, 2004 (BUSINESS WIRE) -- Harmonic Inc. (HLIT) today announced its results for the quarter ended October 1, 2004. The results are in line with its preliminary estimates for the quarter, announced on October 11, 2004.


For the third quarter of 2004, the Company reported net sales of approximately $50.6 million, up from $47.3 million in the third quarter of 2003. As previously announced, the Company's lower than anticipated revenues in the third quarter of 2004 primarily reflected the timing of two significant customer orders, which the Company expects to recognize as revenue in the fourth quarter. Due mostly to increasing customer demand worldwide and partly because of the timing of these two major orders, the Company expects net sales for the fourth quarter of 2004 in the range of $72 million to $78 million.

The CS division, which designs, manufactures and markets digital headend systems for a number of markets, had divisional net sales of $34.6 million in the third quarter, up from $33.3 million in the previous quarter. The BAN division, which designs, manufactures and markets fiber optic products for broadband cable networks, had divisional net sales of $16.0 million, compared to $23.7 million in the previous quarter. International sales represented 59% of total sales for the third quarter of 2004, up from 29% in the third quarter of 2003.

"While the timing of customer shipments remains difficult to predict, we expect strong sales and earnings growth in the fourth quarter," said Anthony J. Ley, Chairman, President and Chief Executive Officer. "We are very encouraged with the strength of our international business and the diversification of our customer base across cable, satellite and telco markets. During the third quarter, we supplied a number of international telco customers with encoders for video-over-DSL and continued to work with domestic telcos on fiber-to-the-premises and other designs to offer digital video. We also continued to help our customers, across different markets, prepare for next-generation compression standards."

At the end of the third quarter of 2004, the Company had cash, cash equivalents and short-term investments of $89.4 million. The GAAP net loss for the third quarter of 2004 was $4.2 million or $0.06 per share, compared to a GAAP net loss of $7.5 million or $0.12 per share for the same period of 2003. Excluding an inventory benefit relating to the sale of previously reserved inventory and the effects of non-cash accounting charges for the amortization of intangibles, the non-GAAP net loss for the third quarter of 2004 was $2.0 million or $0.03 per share, compared to a non-GAAP net loss of $4.2 million or $0.07 per share for the same period of 2003.

For the fourth quarter of 2004, the Company expects net sales in the range of $72 million to $78 million, with GAAP net income in the range of $0.03 to $0.07 per share and non-GAAP net income, excluding the amortization of intangibles, of $0.08 to $0.12 per share.

Microchip earnings rise 67 percent
Q3 seen below target; dividend raised

By Dan Gallagher, CBS MarketWatch
Last Update: 5:16 PM ET Oct. 21, 2004


SAN FRANCISCO (CBS.MW) -- Microchip Technology said its profit rose 67 percent in its second fiscal quarter, boosted by strong sales of its microcontroller product.


The company also issued revenue and earnings forecasts for the current quarter that were slightly below estimates set by Wall Street analysts.

Shares of the Chandler, Ariz.-based company (MCHP: news, chart, profile) were trading down 5 cents in Thursday's after-hours market after closing up $1.78, or 6.2 percent, at $30.46.

The semiconductor manufacturer said for the period ended Sept. 30 it made $60.4 million, or 29 cents per share, compared to $36.1 million, or 17 cents per share, for the same period last year. Earnings were in line with analysts' estimates, according to Thomson First Call.

Revenue for the quarter was $220.7 million compared to revenue of $168.5 million last year. Revenue fell slightly short of the $222.9 million analysts expected.

The company said microcontroller sales achieved "new record levels," gaining about 6 percent while both analog and memory sales were lower.

"I am particularly proud of our solid execution in the September quarter, in the face of very difficult conditions in the overall semiconductor industry during the quarter," CEO Steve Sanghi said in a statement. "These accomplishments reflect well on our overall business strength, given many companies in the semiconductor industry reported revenue that was sequentially down, and many companies also missed their original revenue guidance substantially."

For the third fiscal quarter, the company said both revenue and earnings per share are expected to be flat with the just-ended period. That falls short of consensus forecasts of $230.9 million in revenue and earnings of 30 cents per share.

The company also announced a quarterly cash dividend of 5.2 cents per common share, a 13 percent increase from its previous level. The cash dividend is payable on Dec. 1 to stockholders of record on Nov. 15.

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a negociar acima da mm200 e da LTd que vinha de Dezembro

Relatvamente à jdsu o texto refere que é uma boa aposta não é? Alguém pode comentar? obrigado

Five Stocks for the Coming Technology Rally

By Jim Jubak

MSN Money Markets Editor
10/6/2004 7:37 AM EDT
URL: http://www.thestreet.com/funds/jubak/10186246.html


The battered and bruised technology sector appears to be nearing a bottom. If that's true, then the sector is setting itself up in almost classic fashion for a strong rally in November and December.

There's just one problem. With all of the uncertainty about technology earnings, which stocks do you buy to make the most (and risk the least) in this rally?

To answer that, you have to look at trends in the sector that show where revenue is growing and where it's not. You also have to look at the structure of this still very dysfunctional market.

After I've done that, I'll give you my five technology picks for trading the coming rally.


Three Good Signs for Tech

First, here are three signs that technology stocks are getting ready to rally:

Tech stocks have stopped falling on bad news. After the market closed on Sept. 29, Micron Technology (MU:NYSE) reported earnings of 14 cents a share for the quarter that closed Sept. 2. Analysts had been expecting 21 cents a share.

The day after that 33% earnings miss, the stock dropped just 4 cents, or less than 1%. It looks like investors have been about as pessimistic as they're going to get. And that's usually the sign of a long-term or short-term bottom for a sector.

Wall Street is up to its usual upgrade/downgrade/upgrade games. After pounding away at stocks in the sector for weeks, analysts seem ready to reverse course. Of course, that's because all of those downgrades drove tech stocks down to levels that Wall Street now finds attractive.

On Oct. 1, J.P. Morgan upgraded semiconductor-equipment leaders Applied Materials (AMAT:Nasdaq) and Novellus Systems (NVLS:Nasdaq) to overweight from neutral. J.P. Morgan said the stocks should outperform the market for the next several quarters. Not that long ago, Wall Street argued we'd seen the earnings peak for the chip-equipment makers and it was time to underweight the stocks.

The technical indicators for the tech-heavy Nasdaq Composite have turned positive. After putting in an Aug. 12 low at 1752, the index rose to cross its 50-day moving average on Sept. 10 and then tested that crossover on Sept. 24. On Oct. 1, the index moved above short-term resistance at 1900. The next major resistance is at 2055. This is a positive sign. The Nasdaq is building the kind of early momentum that often brings new money off the sidelines and into a rising market.

There's Always a 'but'

But -- and it's a big but -- tech-sector fundamentals suggest that investors will probably see the traditional seasonal bounce in revenue and earnings for the third and fourth quarters, but the seasonal bounce is likely to be weaker than usual. The best work I've seen on how the seasonal technology revenue (and therefore earnings) bounce is shaping up is in a Sept. 30 report from Goldman Sachs analyst Andrew Root.

Global semiconductor revenue was up 5.7% in August from July levels. The increase is stronger than the typical seasonal median July-to-August increase of 3.7% over the last 19 years, Root notes.

That's the good seasonal news.

But the September data show that revenue gains have slowed and that the third quarter will be up 1%. The increase would be below the seasonal median for second-to-third-quarter growth.

The problem is that while unit sales of some chips, such as the microprocessors sold by Intel (INTC:Nasdaq) , are showing signs of a recovery, sales of other chips, such as the digital signal processors, or DSPs, sold by Texas Instruments (TXN:NYSE) -- up just 13% in August -- are still weak.

The historical average August increase for the DSP subsector is almost 21%, Goldman Sachs says. Subsectors such as DSPs and analog are still working off high inventory levels built up over the summer. Other sectors, such as microprocessors, are showing typical seasonal surges in demand, amid signs that customers have worked off much of their excess inventory in September. And still other subsectors, such as the microcontrollers sold by Texas Instruments and Microchip Technology (MCHP:Nasdaq) , are showing seasonal surges in demand and improving prices. Average selling prices in the microcontroller subsector climbed 2.4% in August.

Failing to Find a Pattern

You'll find this absence of patterns throughout the technology sector. Whether it's wireless phones, flat-screen displays or graphics processors, some parts of each industry are doing seasonally well and others, because demand still lags or because excess capacity is depressing prices, are lagging the median seasonal pickup.

The technology revenue and earnings picture for the seasonally strong third and fourth quarters just isn't uniform enough or strong enough this year to lift all boats. There will be just enough third-quarter earnings misses, even after all the warnings, and disappointing fourth-quarter guidance from tech companies to keep investors on edge.

That wouldn't be such a problem if this stock market wasn't still distorted by investors' reasonable reaction to the excesses of the 1990s and the punishment dished out by the bear market that began in 2000.

We talk about the stock market as if it were one uniform market. But it's really a series of interacting markets. In each of these, investors have time horizons for holding stocks, criteria for deciding how much to pay and when to buy, and reasons for deciding it's time to sell. Value investors, for example, make up a submarket that's distinct from the submarket of momentum investors. And it's extremely unlikely those two markets will ever agree on the value of a stock.

The Key to a Healthy Market

Actually, that's a good thing. In fact, it's critical to the healthy functioning of the stock market. As my colleague Jon Markman has noted again and again, individual stocks regularly get passed from investors in one of these submarkets to another.

A stock that's originally priced by value investors may appreciate until it's picked up by growth investors and then finally, at a higher price justified by its relative strength and technical pattern, wind up in the submarket of momentum investors. In the other direction, momentum stocks regularly get passed to growth investors.

It's a problem for the market when any of these submarkets is missing. The current market for tech stocks is short on value and growth investors. Many value investors don't think tech stocks are cheap enough, even now. Many growth investors don't trust the growth stories of the sector's stocks. Too many of us remember not only what happened to the growth stories of 1999 in 2000-2002, but also how the technology growth stories that seemed so convincing in January turned so sour this year. This leaves most of the heavy lifting in any rally to momentum investors and program traders.

Those groups are certainly strong enough to get the sector rolling and to generate a two- or three-month rally. But (there's that word again) unless growth investors in some numbers decide to buy into the rally, it isn't likely to last beyond January or to convincingly break the trend toward lower highs that has ruled the Nasdaq since January.

Two Options, Five Stocks

This leaves investors who want to take advantage of the impending technology rally with two choices.

First, you can go with the kind of low-priced, high-momentum stocks that often lead any short-term momentum-driven rally in this sector. If you're looking for a stock like that for this rally, I'd suggest JDS Uniphase (JDSU:Nasdaq) , which traded at a closing high of $5.73 in January but closed Monday at $3.41, or Harmonic (HLIT:Nasdaq) , which hit a closing high of $13.15 in February and closed Monday at $7.

Both stocks show modest improvement in their relative strength numbers. JDS Uniphase has climbed to a relative strength of 36 over the last three months, from a six-month relative strength of 21. Harmonic shows a three-month relative strength of 25, up from 13. Let's be clear on what you're buying with stocks like these: It's the leverage on any rally that comes with their low price per share.

Your second choice is to go with stocks that are pure plays, or as close as you can find, on the pockets of fundamental growth in the tech sector. For example, I'd suggest Microchip Technology because of the strength of revenue growth in its core microcontrollers market. Its 52-week high is $36.50 and shares ended at $28.44 Monday. The shares have recently moved above the 50-day moving average.

Micron Technology is a relative pure play on memory chips. On Monday it closed at $12.46, down from a 52-week high of $18.25. Texas Instruments is strong in microcontrollers (above seasonal growth) but exposed to DSPs (below seasonal growth). But it's likely to be a stock of choice for institutional managers looking for a liquid way to play any technology rally. Shares finished at $23.04 Monday, down from the 52-week high of $33.98, and relative strength has climbed to 31 over the last three months from a six-month 16.

I'd wait a little longer to buy any of these stocks for a year-end technology rally. It would be great to get any negative surprises in the third-quarter earnings announcements out of the way. Besides, history suggests that the best time to buy for an end-of-year rally is around Oct. 15, when year-end tax selling has had a chance to set in and maybe produce a new low or two.

I'll be watching and waiting until then.


At the time of publication, Jim Jubak owned or controlled shares in the following equities mentioned in this column: JDS Uniphase and Micron Technology. He does not own short positions in any stock mentioned in this column. Email Jubak at jjmail@microsoft.com.