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SUNNYVALE/TEL AVIV – Harmonic Inc is expected to expand its market base following the formal acquisition of Scopus Video Networks Limited before the end of the first quarter of 2009.

Harmonic has received voting agreements from the shareholders, who represent about 50% of Scopus’ outstanding shares, for the proposed acquisition.

“This acquisition extends Harmonic’s diversification strategy, providing us with an expanded international sales force and customer base, particularly in video broadcast, contribution and distribution markets, as well as com¬plementary video-processing technology and expanded research and development capability,” said Patrick Harshman, president and CEO of the California-based Harmonic.

Harshman added: “Like Harmonic, Scopus has strong gross margins and a proven track record of innovation and growth. By combining our two companies, we see significant opportunities for product, sales and cost synergies.”

For Scopus CEO Yaron Simler, the acquisition will provide Harmonic a definite edge over others. He said: “The combination of Harmonic and Scopus will further extend Harmonic’s video delivery leadership.”

Scopus provides digital video networking solutions that are being used by satellite, cable and terrestrial operators; broadcasters; and telecoms service providers. Scopus solutions support DTV, HDTV, live event coverage, and content distribution.

Simler stressed that while Harmonic brings its powerful customer relationships, brand reputation, technology leadership and financial resources, Scopus provides highly skilled employees, proven distribution channels, strong customer relationships and sales momentum in emerging international markets.

With its corporate office based in Israel, Scopus maintains 300 employees worldwide.

From January to September 2008, Scopus reported revenues of $55.4 million, or an increase of 35% over the comparable period of the previous year. About 79% of these revenues came from outside the US. It should also be noted that no single customer represents more than 10% of total revenues.

“Scopus’ exciting new video products, including our next-generation integrated receiver processor (IRP) platform, are a great fit with Harmonic’s port¬folio of industry-leading products and solutions,” Simler said. “We see this transaction as very beneficial for the customers and employees of both companies,” he added.

Absorption of Scopus is expected to result in cost synergies of $8 million-$10 million every year for Harmonic. The two companies described the transaction as “accretive” to Harmonic’s non-GAAP (generally accepted accounting principles) earnings in 2009. These are exclusive of the amortisation of intangibles and non-recurring charges such as restructuring and transaction costs.

According to Harmonic, the non-GAAP earnings, which refer to accounting charges and credits and are non-cash or non-recurring in nature, are not useful in managing its operations and business. Despite this, the company has been presenting the non-GAAP measures to assist the investment community in understanding operating performance.

As to the impact of the transaction on GAAP earnings, Harmonic will determine the appropriate purchase accounting at closing end and, thus, cannot yet determine the effect.

 

 

 

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