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Convergence

Frequently Asked Questions (FAQs)

Why is Harmonic acquiring Omneon and why now?

The growth of broadband internet has spurred a demand for personalized and mobile video consumption. This has resulted in a radical change in the traditional divide between content owners and service providers which is now blurring, resulting in the emergence of new media companies focused on both production and delivery of video.  These changes are creating an opportunity for a new kind of video infrastructure, one that can span across acquisition and production to delivery.

This transaction positions Harmonic to become the leading supplier of video production, processing, management and delivery solutions to major content creators, aggregators and service providers.  The combination of Omneon and Harmonic creates a company with industry leading technology and the broadest expertise in video compression, processing and delivery; in video optimized storage, production and playout servers; and in media processing and media management.  We will become a company with unparalleled customer reach with both global service providers and global content producers. We believe this combination creates a unique company with a set of skills and solutions that is unparalleled in the industry.

How does this acquisition affect/change Harmonic’s competitive position?

In the rapidly converging world of video production and delivery, this acquisition strengthens Harmonic’s position as a leading supplier of video infrastructure to a broad range of media customers with a solution set unparalleled in the industry. Specifically, Harmonic’s technology portfolio, from content acquisition to delivery, is both broader than that of any competitor and is also market-leading in multiple key product categories. Harmonic’s penetration of the customer base and customer relationships is substantially strengthened relative to competitors. Financially, this acquisition strengthens Harmonic’s margins, and its enhanced scale allows Harmonic to invest even more significantly in R&D.

What business synergies are anticipated by this move?

Harmonic expects very positive business synergies from the deal. First, the complementary nature of the customer base implies that there will be cross-selling opportunities for each company’s products to the other company’s customers. Secondly, both companies have complementary technologies that we believe can be leverage to create new products – for example, Harmonic’s expertise in encoding can be coupled with Omneon’s video servers to output not just baseband video but also transport streams that directly feed a traditional transmission chain or streaming video that can feed web-sites. Thirdly, the large base of channel partners should significantly strengthen Harmonic’s reach.

What is the value to existing Harmonic and Omneon customers from the acquisition?

The combined company will serve as a terrific partner to the customer base. The expanded reach and the incremental services capability will help the combined company continue our focus on best-in-class customer support and responsiveness. The breadth of video expertise, the technology adjacencies of the two companies, and the R&D investment through a combined engineering force of more than 450 engineers will further accelerate the pace of innovation and new products that we bring to bear for our customers.

Is this a full acquisition, a merger or just an investment?

Harmonic is acquiring all outstanding shares of Omneon and will fully own the company.

What are the financial terms of the deal?

Harmonic will acquire all outstanding shares in a mix of stock and cash. Harmonic will issue approximately 17.1 million shares to Omneon’s shareholders and an additional $158 million (net of $32 million of Omneon’s cash at closing) will be paid in cash, for a total enterprise value of $274 million (as of May 5).

What kind of financial impact will this deal have on 2010 or 2011?

The transaction is expected to be neutral to Harmonic’s non-GAAP earnings in 2010 and accretive to non-GAAP earnings for 2011.

What is Harmonic’s core business and value proposition?

Harmonic Inc. offers the industry’s most powerful solutions for delivering live and on-demand video to TVs, PCs and mobile devices. Harmonic’s technical innovation and market leadership enable the company to offer a unique and comprehensive solution portfolio—including encoding, transcoding, content preparation, stream processing, asset management, edge processing, and delivery. Using these award-winning and industry-leading solutions, operators can reduce costs and differentiate their services by offering consumers a higher quality, personalized multi-screen experience.

Harmonic, founded in 1988, is publicly traded on the NASDAQ exchange under the ticker symbol HLIT.

Who are Harmonic’s target customers?

Broadcast, cable, Internet, mobile, satellite and telecom service providers of all sizes around the world choose Harmonic’s IP-based digital video, software, and broadband edge and access solutions. Harmonic’s customers deliver services in virtually every country.

What are Harmonic’s key product lines?

Harmonic offers a wide range of video delivery solutions that enable operators to deliver a compelling range of value-added services including: superior quality HD, SD and 3D video; converged multi-screen video delivery to the TV, PC and mobile devices; video-on-demand (VOD), network PVR and time-shifted TV; and targeted ad insertion.

Intelligent bandwidth utilization is also made possible with solutions such as: HFC network segmentation and extension; switched digital video; DOCSIS 3.0 modular CMTS (M-CMTS); and Cable IPTV.

Key product lines include:

  • Encoding: Electra and Ion MPEG encoders, Ellipse contribution encoders
  • Video Processing: ProStream 1000 stream processor, DiviTrack statistical multiplexing, ProView IRDs
  • Convergence/transcoding: MediaPrism Convergence Suite, Rhozet universal media transcoding
  • On-Demand: StreamLiner video servers, Armada asset management
  • EdgeQAM: NSG universal edgeQAM
  • HFC access: SUPRALink, MAXLink, PWRLink forward/return path HFC, PWRBlazer nodes
  • Management: IRIS QoS monitoring, NMX Digital Service Manager, DMS Distribution Management