This is just very pure speculation.
Why would they do a secondary and not do anything with the money?
And would they hire a VP of Sales that is from Terayon, a company that Motorola acquired?
Is there any correlation between the products that harmonic sells and the markets that motorola serve?
Pure speculation, but harmonic may be acquired by motorola!
What are your thoughts?
1) Agreed that where HLIT and MOT have overlapping products, HLIT is superior, but isn't that a good reason for MOT to be interested in HLIT ?
4) Unfortunately, this one's right on with a strong euro making HLIT look very cheap to European companies. Lots of dollars in Asia and elsewhere that may find their way home someday, too.
Mot is not going to buy HLIT.
1) There are too many overlapping products between the two companys. Given that all of MOT's products suck except for their pump - there is still overlap.
2) Having just executed a secondary offering does not make HLIT more attractive
3) From my knowlege - Comcast really likes HLIT (QAMS and encoders). Comcast does not like MOT - kind of like an old grumpy couple that has been married for too long. I don't think Comcast would want MOT to buy HLIT for feat that MOT would screw up HLIT.
4) I wouldn't be surprised to see one of the big guys swoop in a pick up HLIT to get in the video space, just like ERIC did with Tandberg. Possibly Alcatel/Lucent, Siemens, Nokia or someone closer to the space like Thomson.
I believe this adds a bit of credence to the idea that MOT might be in the market for buying HLIT. This is a couple of paragraphs from this article about Comcast increasing annual spend which is a good thing for the likes of HLIT:
"Oppenheimer & Co. analyst Lawrence Harris said that Motorola Inc. will be one of the principal beneficiaries of the hiked spending, as the Schaumburg, Ill., company is the largest supplier of set-top boxes to Comcast. A set-top box tunes information from a cable provider for display on a television.
In 2006, sales to Comcast counted for 29 percent of Motorola's connected home sales, and the company said it expects the number of shipped HD-DVR boxes to grow by 5 million in 2008, Harris said."
I think the vision is that HLIT acquisition would compliment the current product breadth that MOT offers into the marketplace. I believe edgequam (sp?) product sales have been exploding as well. I remember hearing Harshman speak at one of these investment banks and he said that we are in the beginning of a massive upgrade, just scratching the surface I believe he said by these cable companies.
I anticipate Q4 to be a big quarter for HLIT and hopefully it will run up and then be acquired by MOT for $18 - $22 per share. I would be one happy camper!!!
actually find your post interesting. especially in light of the recent offering. i thought is was for a specific acquisition. now i'm beginning to think they might have done it to improve their cash position to make themselves more attractive to a purchaser. while many like the pure play. i don't. think technology changing fast and it would be good to get a solid premium, e.g., $16 rather than see co flounder in two years. imo.
Having a secondary to make the company attractive to an acquirer is a novell concept although with the price of a share now lower than the offering price, I can see how you came up with that. That doesn't seem a likely motive because an acquirer would probably have to pay a premium ( possibly a large premium ) over the offering price. Paying a premium, $16 as you mention, for the $12 cash HLIT got for secondary shares does not make HLIT more attractive.
It is very hard to see why you don't like HLIT being a pure play. The fast paced change of technology has worked in the company's favor by opening new opportunities to replace existing obsolete infrastructure. Gross margins are higher with change because revenue is not based on commodity products. If HLIT were to get in a battle with behemoths like MOT, CSCO and ERIC selling commodity products, that would be the end. Harmonic has been able to more than hold its own on the R&D front in the areas in which it competes. Why the pessimism and fear of technological disaster in two years when the company is out ahead of the rest and pulling away ?
Doubt money from the secondary was intended to be utilized immediately. The secondary cash gives Harmonic a capability to react quickly if opportunity presents itself and also means a higher level of sales can be supported over time. Logistical ease dictates the cash be raised all at once rather than on 50 different occasions to secure a $ million, then $ 10 million, then $ 2.5 mil and so on.
After Zander was moved aside at Motorola, the company said it wanted to broaden its revenue stream so the idea they might be interested in HLIT becomes a much more plausible one. I wouldn't be surprised if that is the basis for today's strength.
An acquisition of Harmonic by Motorola would be great for traders holding HLIT and the acquirer but not so hot for long term investors in HLIT who would lose their pure play. A case might be made that subscribers would lose also if the innovative atmosphere of a pure play gets buried in a corporate behemoth with other interests.
Long term investors have much more to gain if Harmonic remains independent except for possible partnerships of expedience.