Comments From TheStockMasters

Harmonic Inc. (HLIT) is close to a new 52-week high today. In the last 6 months the stock price has jumped over 46% and today shares are trading around $11.

There has been a bunch of buzz in blogger land on this stock and now that Harmonic is looking to be making a small profit (Net Income of $1M in 2006) its game on. Harmonic designs, manufactures and sells products that enable network operators to deliver broadcast and on-demand video services that include digital video, video-on-demand (VOD) and high definition television (HDTV) as well as high-speed Internet access and telephony. Sounds great right?
They sell their products to some big names including Charter Communications, Comcast, EchoStar, Time Warner Cable, Cablevision Systems, and Acatel to name a few. Net sales to their ten largest customers in 2006, 2005 and 2004 accounted for approximately 50%, 54% and 55% of net sales. Furthermore, Comcast (CMCSA) represented 12% of their sales last year alone.
But before you jump on the band wagon you should now Harmonic’s competitors in the fiber optics systems business include corporations such as Motorola, Cisco Systems and C-COR. In the digital video systems business they compete broadly with vertically integrated system suppliers including Motorola, Cisco Systems, Tandberg Television and Thomson Multimedia. These guys are the remora fish swimming with the big sharks and at any minute if an industry standard gets accepted by a large hammerhead, it’s game over for Harmonic. That of course is the glum but realistic outlook on HLIT.
They have an earnings call coming up on April 25th, and if these guys are a winner on the call, just imagine what the stock will do? This is a crazy stock but for all you day traders and gamblers out there, this could be your lucky or un-lucky horse you’ve searching for. There are a ton of options being played on this stock so use extreme caution. Make the wrong move and you’ll be feeling like this dude.

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