Calls for Harmonic to seek a possible buyer mounted as Ancora Holdings Group and Romanesque Capital Management urged the pay TV technology provider to maximize shareholder value by looking into a potential sale.
In a presentation released Monday (Nov. 18), Ancora claimed Harmonic stock trades at a depressed multiple. The company’s stock closed Nov. 18 at $11.95 per share, but Ancora could achieve $22 per share “by meeting its [the company’s] 2026 targets and capitalizing on valuation opportunities.” Ancora said it identified “issues with management’s investor communications, rather than fear of actual execution” as the reason for the low share price.
Ancora, which owned 2.3% of the company’s stock as of September, recommended a “strategic review aimed at a value-maximizing sale.” Ciena, which supplies networking equipment, software and services, could be a possible suitor given it “has material strategic motivations” that “would be growth-, margin- and multiple-accretive.” Harmonic chairman Patrick Gallagher sits on the boards of both companies, the presentation noted.
Harmonic’s performance has trailed the Nasdaq telecommunications benchmark index by 41%. A disconnect exists between the company’s strong fundamentals and share price, Ancora said. “The business has performed, innovation and product development have continued, spending on networks and upgrades have accelerated … but the stock has not followed,” the presentation said.
At the heart of the volatility in the price of Harmonic stock is “management’s miscommunications to investors,” the presentation said, citing an “unprompted” management statement during a quarterly earnings call presented “with little context” that the company’s 2025 revenue outlook was weaker than previously indicated.
Romanesque Capital, another Harmonic stakeholder, supported the call for a review aimed at a possible sale.
“We have long held high conviction in Harmonic’s market-leading products, valuable partnerships and disruptive innovation, having been invested since 2016,” the company said in a statement. “Despite these tailwinds, the company has been unable to realize value in its stock price.
“This is why we were extremely encouraged to review Ancora Holdings’ presentation outlining its analysis of the value opportunity at Harmonic and are in full support of the investor’s recommendations,” the statement continued. “As a long-term shareholder, we have frequently shared similar concerns with leadership regarding the disconnect between the company’s stock price and its impressive fundamentals. It’s been our view that Harmonic should be part of a larger organization where synergies could be realized. We sincerely hope management and the board of directors begin to listen to shareholder feedback and initiate a review aimed at a value-maximizing sale.”
Last November, Harmonic said it was considering selling its video business and has received interest from several potential buyers. In Q3, the company’s video division posted quarterly revenue of $51.4 million, a 20% decline, on total quarterly revenue of $127.7 million.
“Together with financial and legal advisers, we're assessing a range of alternatives for the video business with a clear goal of optimizing long-term value,” then-CEO Patrick Harshman said at the time.
The company’s broadband business also declined in the quarter, down 17.5% on revenues of $75.8 million.
Harmonic entered the video business in 2012 with the purchase of storage and transcoding supplier Omneon.
