PhotonBull
Equity Researcher, Co-Runner of Retail Club
Harmonic becomes a clean pure play on virtualized cable access by selling its slower, loss-making video unit to MediaKind for $145M, right as DOCSIS 4.0 ramps. Its cOS software runs the cable access network instead of proprietary hardware, cutting headend space, power and upgrade cycles; it serves 45.7 million modems for 150 customers. Broadband revenue rose 43%, backlog jumped 87% to $582M and guidance was raised, at about 5x EV/sales with net cash and buybacks. x.comÂ
Photonics stocks such as Lumentum, Coherent and Applied Optoelectronics look vulnerable because the trade is far too crowded. Today's reversal in the space could be the start of the next leg down. x.comÂ
Photonics stocks look like a crowded rotation rather than a better bet than memory. Photonics has a smaller addressable market than memory and moves with it anyway. Buyers are driven by recency bias after Applied Optoelectronics' 90% recovery, traders liquidated in memory seeking higher-risk bets, and smaller companies with higher multiples. @therogueoracle adds that these stocks had massive runs and have not pulled back nearly enough, so they are more likely to chop sideways and down. x.com … Show more
Harmonic's fundamentals kept improving while the market forgot it. It delivered a double beat and raised guidance, and the stock showed strong price action with a clean retest of its 50-week average. x.comÂ
Harmonic Drive Systems is one of the better humanoid robot exposures at a $4B valuation, and it is listed in a Goldman Sachs research report. Chinese competitors might be used for mass production, but Western supply chains are the preferred way to invest in and help build up the theme. x.comÂ
Semiconductors should keep working through year-end, as sentiment on the tech conference circuit is clearly max long AI and semis. Infrastructure software and security names that have pulled back or consolidated should probably work too, while bottom-fishing in this year's losers will not. x.comÂ
Harmonic's cOS turns it into a software business whose margins rise with every cable operator that converts from hardware. cOS virtualizes cable access networks, holds over 95% share of virtualized CCAP and serves every major US cable operator; DOCSIS 4.0 upgrades by Charter, Comcast and Cox against fiber require it. Q1 revenue rose 43% to $121.7M, backlog rose 87% to $582M of mostly software and services, and gross margin is 52%. At 3.5x forward revenue versus peers' 4-6x, it hasn't re-rated. … Show more
Harmonic is the toll booth between AI-era traffic and US cable networks, with over 95% of the software operators need for DOCSIS 4.0 upgrades. Upstream traffic grows 21.7% a year, so operators must upgrade or lose subscribers to fiber. Comcast, Charter, Cox and Altice run its cOS platform, and every node in Charter's $5.5B upgrade needs a Harmonic license. Q1 revenue rose 43% and backlog hit $582M, up 87%, while software should rise from 8% of revenue in 2022 to 38% by 2028. x.com x.com x.comÂ