BOSTON, Nov. 5, 2003 (PRIMEZONE) -- Readers of Paul McWilliams' investment newsletter, the pmcw Report (http://www.pmcwreport.net/), have been hearing about his views of a digital multimedia revolution for quite some time. McWilliams coined the phrase "TriMedia" back in 1998 to describe what he saw coming. TriMedia is "the delivery of video, voice and data over a single Internet Protocol broadband pipe."
To capitalize on the opportunities in the space, he advised members of his service to buy Harmonic (Nasdaq:HLIT) when it was trading as low as $1.07 in October 2002. As it became clear the multimedia wars would soon build momentum, he recently urged members to buy more at $3.50 and again at $5.50.
Microsoft (Nasdaq:MSFT) clearly shares McWilliams' high opinion of Harmonic. They named the small California company as one of only a few partners in their plans to deliver end-to-end TriMedia systems. Other vendors include:
-- Juniper Networks Inc., (Nasdaq:JNPR) -- a pmcw Report "investment idea" at $8.50
-- Intel Corp (Nasdaq:INTC) -- a pmcw Report "investment idea" at $17.00
-- Alcatel (NYSE:ALA)
-- Pace Micro
-- Tandberg TV
-- Thomson
When asked about the infrastructure players like SeaChange (Nasdaq:SEAC) and Concurrent Computer (Nasdaq:CCUR), he had the following to say, "I'm always on the lookout for small companies that are well positioned for the markets I feel are set for rapid expansion. To a great extent, Concurrent and SeaChange fit this definition. However, I don't know that the server space in the VoD (Video on Demand) boom will have durable differentiation."
McWilliams sees the multimedia market playing out similarly to how the server market was commoditized over the past couple years. "As we witnessed in the Internet explosion, certain parts of the system commoditize other parts. By no means am I trying to trivialize the technical accomplishment of building a server; volume coupled with the convergence of several events pushed a large portion of the server market into commodity city."
He sees a different opportunity for Harmonic.
In a recent announcement, Ed Gracyk, Director of Marketing for MSFT IPTV, said that it's not a matter of "if," but "when" the multimedia world switches to an IP delivery method.
Mr. Gracyk's comments are central to McWilliams' Harmonic investment thesis: "In the world of VoD in an IP-based system, I see narrow-cast gateways, like Harmonic's NSG, facilitating the incremental rollout of systems in a fashion that minimizes the need for highly differentiated servers."
He believes this technological advantage also positions Harmonic well to be a player in the Bell FTTP (Fiber to the Premises) program and with the satellite companies, who need to step up their deployment of channels, bandwidth and features to compete. "Due to this convergence of events, we reiterate our opinion that Harmonic is a very attractive buy at under $8. In addition to this, we feel these events present potential downside for Scientific Atlanta (SFA) and, to a lesser extent, Motorola (MOT)."
McWilliams' equity model portfolio is up by over 300% since its September 2002 inception.
He has written dozens of reports on Harmonic and the TriMedia explosion. Those interested in learning more can sign up for a free thirty-day trial to his service:
http://www.pmcwreport.net/join.php3?refer=PZ1
About the pmcw Report
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