Harmonic, Inc. engages in the development and sale of video delivery software, products, system solutions, and services. It operates through the Video and Cable Edge segments. The Video segment sells video processing and production and playout services to cable operators, satellite and telecommunications pay-TV service providers, and broadcast and media companies, including streaming new media companies. The Cable Edge segment markets cable access solutions and related services, such as CableOS software-based Converged Cable Access Platform (CCAP) solutions. The company was founded in June 1988 and is headquartered in San Jose, CA.
We depend on cable, satellite and telco, and broadcast and media industry spending for our revenue and any material decrease or delay in spending in any of these industries would negatively impact our operating results, financial condition and cash flows.
The markets in which we operate are intensely competitive.
We need to develop and introduce new and enhanced products in a timely manner to meet the needs of our customers and to remain competitive.
Our future growth depends on market acceptance of several broadband services, on the adoption of new broadband technologies, and on several other broadband industry trends.
We depend significantly on our international revenue and are subject to the risks associated with international operations, including those of our resellers, contract manufacturers and outsourcing partners, which may negatively affect our operating results.
We purchase several key components, subassemblies and modules used in the manufacture or integration of our products from sole or limited sources, and we rely on contract manufacturers and other subcontractors.
The loss of one or more of our key customers, a failure to continue diversifying our customer base, or a decrease in the number of larger transactions could harm our business and our operating results.
We rely on resellers, value-added resellers and systems integrators for a significant portion of our revenue, and disruptions to, or our failure to develop and manage our relationships with these customers or the processes and procedures that support them could adversely affect our business.
We have made, and may continue to make, acquisitions, and any acquisition could disrupt our operations, cause dilution to our stockholders and materially and adversely affect our business, operating results, cash flows and financial condition.
We may not be able to effectively manage our operations.
We face risks associated with having outsourced engineering resources located in Ukraine.
In order to manage our growth, we must be successful in addressing management succession issues and attracting and retaining qualified personnel.
We face risks associated with having facilities and employees located in Israel.
Our operating results are likely to fluctuate significantly and, as a result, may fail to meet or exceed the expectations of securities analysts or investors, causing our stock price to decline.
Fluctuations in our future effective tax rates could affect our future operating results, financial condition and cash flows.
We or our customers may face intellectual property infringement claims from third parties.
We may be the subject of litigation which, if adversely determined, could harm our business and operating results.
We may sell one or more of our product lines, from time to time, as a result of our evaluation of our products and markets, and any such divestiture could adversely affect our continuing business and our expenses, revenues, results of operation, cash flows and financial position.
We could be negatively affected as a result of a future proxy contest and the actions of activist stockholders.
Our failure to adequately protect our proprietary rights and data may adversely affect us.
Our products include third-party technology and intellectual property, and our inability to acquire new technologies or use third-party technology in the future could harm our business.
Our use of open source software in some of our products may expose us to certain risks.
We are subject to import and export control and trade and economic sanction laws and regulations that could subject us to liability or impair our ability to compete in international markets.
We may need additional capital in the future and may not be able to secure adequate funds at all or on terms acceptable to us.
Cybersecurity incidents, including data security breaches or computer viruses, could harm our business by disrupting our business operations, compromising our products and services, damaging our reputation or exposing us to liability.
Our operating results could be adversely affected by natural disasters affecting us or impacting our third-party manufacturers, suppliers, resellers or customers.
Our business and industry are subject to various laws and regulations that could adversely affect our business, operating results, cash flows and financial condition.
Some anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
We are implementing a new enterprise resource planning system, and if this new system proves ineffective or if we experience issues with the transition, we may be unable to timely or accurately prepare financial reports, make payments to our suppliers and employees, or invoice and collect from our users.
The conditional conversion feature of our convertible senior notes, if triggered, may adversely affect our financial condition and operating results.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.
Our common stock price, and therefore the price of our Notes, may be extremely volatile, and the value of an investment in our stock may decline.
Our stock price may decline if additional shares are sold in the market or if analysts drop coverage of or downgrade our stock.
Our Video segment net revenue decreased 6% in the three months ended March 29, 2019, compared to the corresponding period in 2018, primarily due to a shift in timing of certain bookings from the first quarter to later in the year, driven primarily by growing customer interest in SaaS offerings and the increased time to close SaaS transactions relative to appliance-based product sales transactions.
Our Cable Access segment net revenue decreased 30% in the three months ended March 29, 2019, compared to the corresponding period in 2018. The decrease was primarily due to a shift in timing of certain CableOS related hardware shipments from the first quarter to later in the year and a decrease in sales of CableOS software and support services.
Net revenue in the Americas decreased 30% in the three months ended March 29, 2019, compared to the corresponding period in 2018, primarily due to a decrease in our Cable Access segment revenue.