Chris Forte’s “Thoughts to Start the Day” – HLIT

Posted on July 6, 2022 by Scott Shuda

Did you watch TV lately? There’s a lot of gadgetry and magic behind the scenes needed to make content appear on that new 51” flat screen you lugged home from Best Buy.

Harmonic Inc (HLIT, $8.62) makes the magic happen and in an increasingly big way. The company checked in with a strong Q1 on May 2. Revenue was up 32%. “Robust bookings resulted in a record backlog and deferred revenue at quarter end, demonstrating continuing competitive market momentum and growth visibility.”

In a recent Breakout Ideas Podcast, Altimetry said HLIT is benefiting from two big trends. One, it doesn’t matter which streaming company wins, we are consuming more of our content from streaming than classic cable. Secondly, there is a massive consumption of bandwidth. So HLIT helps with both and business is booming. “We think this one has room to run, the market hasn’t wrapped its head around what they are doing.”

HLIT’s products and software is proving to be head and shoulders above the competitions.

“The distributed architectures we invented have become a de facto industry standard. It’s becoming clearer that our continuing technology advances, expanding cloud-native software and digital hardware are way out in front of the competition. Consequently, demand for our end-to-end systems, encompassing software and hardware continues to exceed previous expectations.

“Looking ahead to the remainder of 2022, we anticipate existing customers will continue to aggressively scale.“

In February the company announced a stock repurchase program wherein the company may repurchase up to $100M of its outstanding shares through February 2025, representing 10% of its current market cap.

After spiking to $10 on the Q1 report HLIT has sagged back to $8.60 where I am a buyer. Considering how much the tech sector has been scalped in the last six weeks HLIT has held up well and looks to have a good second half of 2022 and beyond.
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Josh Ebben is our Breakout Investor’s Swiss Army knife. This place wouldn’t last 5 minutes without him. He’s our Gorilla Glue. He’s human Duck Tape. Actually Duck Tape is made out of Josh. He’s a technology professional, an entrepreneur, and a savvy microcap investor. If he was a Star Trek character he’d be Captain Kirk, Spock, and Scottie all rolled into one. He makes sure the website functions, our YouTube videos get produced, and podcasts get, um, podded.

I enjoyed his running commentary on BoardwalkTech’s (BWLKF) recent call
“CEO Andy “We’ll let the numbers do the talking going forward!” – #confidence”
“Hammering home the point that next Q is going to be even better in the numbers!”
“No need for cash as they reach profitability in the coming Qs”
“One of the better calls I have been on in a while.”
“Nice to see a good handful of questions come through as well, seems people might finally be giving them a look!”

QUICKIES
*We have a twin bill for you on YouTube. “
Call With Management – Better Choice Company (BTTR)” led by Bradley Steveson, and “Florian’s Monthly Elite Call Summary 7-2-22.” Great work Brad, Florian, and Josh.
*If you’re interested in pet health company BTTR Brad has a post on the Feed entitled “Comments Post BTTR Call w/Management” with his insights and financial model.
*
Micron CEO: Long-term demand trends are healthy
*“Oil prices fell by almost 10% today to close below $100. Oil also closed below that key trend line that started in March 2021 and was resistance for some time and later became support in February 2022. If there is more follow-through to the downside tomorrow, that would be nasty for oil, opening the door to a drop to around $80.” –
Michael Kramer, Mott Capital

Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert in order to bring us to the one spot in the Middle East that has no oil! – GOLDA MEIR

Good luck to all – Chris

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