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Tickers in this Article: HLIT
Even with the rapid rise in new and exciting technological devices, one thing's for sure: People love watching TV. It doesn't matter when or where -- or on what device.

The companies that provide the infrastructure for viewing content across a large and growing variety of devices are frequently overlooked. Harmonic (Nasdaq: HLIT), a market leader in video-on-demand services, is one such company.

Harmonic has many opportunities to expand its market share, especially with the proliferation of video on demand and high-definition TV. Yet the biggest opportunity for Harmonic is in the expansion of pay-TV services in international markets. The emergence of the global middle class is leading the demand for pay-TV services, which has compelled providers to expand their content offerings.

Harmonic sells high-performance video infrastructure products that enable content providers to efficiently create and deliver a full range of video services to consumer devices, including TVs, PCs, tablets and smartphones. Its revenues are generated from selling video processing solutions to various media companies and providers, including broadcasters (HBO, NBC, ESPN), satellite providers (Dish (Nasdaq: DISH), DirecTV (Nasdaq: DTV)), telcos (SingTel, Vodafone (Nasdaq: VOD)), cable providers (Charter (Nasdaq: CHTR), Cox, Comcast (Nasdaq: CMCSA)) and new media ( (Nasdaq: AMZN)).

International satellite, cable and telco providers are increasing their capital spending to expand their video offerings. In the grand scheme of things, there are thousands of media and broadcast companies around the world, many outside the U.S. Most need to upgrade their infrastructure -- particularly to HD -- and that's where Harmonic comes into play.

Harmonic counts three of the top five broadcasters in the U.S. as customers. In terms of providers, Comcast, the largest cable company, already accounts for 16% of total revenue. Its competitors Time Warner Cable (NYSE: TWC), Cox, Cablevision (NYSE: CVC) and Charter are all Harmonic customers.

Harmonic is also tapping the $2 billion market of so-called converged cable access platforms, which seeks to put all services -- video, data and so on -- on the same IP platform. Harmonic's first product in the space, the NSG Pro, is nearly set for release, and the company already has its first multi-million-dollar order.

Harmonic has a pristine balance sheet, with $169 million in cash, or $1.68 a share, and no debt. Another thing investors should be excited about is Harmonic's active share repurchase program. Over the past six quarters, Harmonic has repurchased over 20 million shares, and the company has earmarked $94.8 million of its available cash for more buybacks.

Harmonic's strong balance sheet and market-leading position mean it could embark on more mergers and acquisitions expand its business. In the past, the company focused on complementary acquisitions like its 2009 pickup of Scopus Video Networks and 2010 purchase of Omneon. On the other hand, Harmonic could easily be acquired by one of the bigger players looking to strengthen its presence in the video infrastructure space.

Risks to Consider: Harmonic has managed to take business away from its competitors -- such as Cisco, Ericsson, Google's Motorola Mobility unit and Arris, among many others -- but the space is still fragmented.

Action to Take --> Buy Harmonic with upside to $9 a share, a price-to-earnings (P/E) ratio of 25 on its estimated 2014 earnings per share.

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