Company Faces Pressure from Harmonic Investors to Examine Potential Sale Scenario

Shares of Harmonic, a leading provider of video and broadband solutions, have been experiencing a downturn, with the company's stock trading at a depressed multiple. According to investment firm Ancora, the primary reason for this low share price is management's perceived issues with investor communications.

In a recent report, Ancora highlighted the disconnect between Harmonic's strong fundamentals and its share price, stating that the volatility in the price of Harmonic stock is due to "management's miscommunications to investors."

Last November, Harmonic announced its consideration of selling its video business, with then-CEO Patrick Harshman stating that they are assessing a range of alternatives for the video business with a goal of optimizing long-term value. Since then, several potential buyers have shown interest in Harmonic's video business.

In Q3, Harmonic's video division posted a 20% decline in quarterly revenue, amounting to $51.4 million, while the broadband business also declined, with a 17.5% decrease in revenues to $75.8 million. This resulted in a total quarterly revenue of $127.7 million, trailing the Nasdaq telecommunications benchmark index by 41%.

Ancora and Romanesque Capital Management have urged Harmonic to seek a possible buyer, with the latter supporting the call for a review aimed at a possible sale. One potential suitor could be Ciena, a networking equipment provider.

Ancora recommends a strategic review aimed at a value-maximizing sale, claiming that Harmonic stock could achieve $22 per share by meeting its 2026 targets. The investment firm believes that such a move would optimize Harmonic's long-term value and address the current issues with management's investor communications.

Harmonic's chairman, Patrick Gallagher, sits on the boards of both Harmonic and Ciena, raising questions about potential conflicts of interest. However, the search results do not provide any information about companies recommending a strategic review aimed at optimizing Harmonic through a value-maximizing sale.

As Harmonic continues to grapple with these challenges, investors will be watching closely to see if the company will heed the calls for a strategic review and whether it will lead to a brighter future for the company and its shareholders.