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Harmonic Rising to the Occasion In Tech

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Harmonic has broad-based strength in current business trends and emphasizing the company's strong position in front of a number of macro technology trends.

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Merriman noted Harmonic (HLIT) CEO Patrick Harshman delivered a very upbeat presentation during day 1 of the MCF Investor Summit 2007, citing broad-based strength in current business trends and emphasizing the company's strong position in front of a number of macro technology trends.

Among these trends are: 1) the transition from standard definition to high definition video; 2) the transition of video networks from broadcast to interactive/on demand; 3) the rollout of IPTV services by telcos globally; 4) the need for increased bandwidth to support new services on the part of the cable operators; and 5) the proliferation of video content onto mobile networks.

I agree with all of the above comments as well as some other positives, including HLIT's product positioning which I feel is very strong given the current environment.

Bottom line, I think HLIT can rise into the mid-high teens or higher depending on overall levels in the Naz. So I'm waiting for another bout of weakness to add again -- the caveat being they are approaching long term resistance around $12 and multiple candlestick formations have been quite bullish of late. If it breaks $12 I may consider buying strength.

There are other names in the group if you don't want to chase HLIT.

  • I'm still shocked Ciena (CIEN) hasn't gained traction since it completely blew out its last EPS report.

  • I'm surprised Finisar (FNSR)/JDS Uniphase (JDSU) have performed so poorly on muted, but not terrible quarterly reports, especially since their stocks were sold down before they reported.

  • I've also written extensively about Acme Packet (APKT) and while not super liquid like those mentioned above, it is another name that I am frankly surprised has been held down since it reported a strong quarter and the shorts have not moved to cover that name. I suspect the short levels are higher than reported in many areas and have really kept a lid on small/mid cap tech. If we see a net unwind of levered ETF shorts and large futures related shorts, this could benefit the small/mid cap tech area as much as anything.

  • Lastly, a stock that is terribly cheap is QLogic Corp. (QLGC). I need to do more research on their product portflio in relation to market demands to build a long term thesis -- however, great balance sheet with loads of cash. Additionally, even given recent poor quarterly performance, profits remain high so any meaningful uptick in revenues would translate to even stronger EPS growth. This has me watching and waiting for a trading entry.
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Positions in HLIT, CIEN, FNSR, APKT

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