Why Harmonic, Inc. Shares Popped Today

By Markets Fool.com

Image source: Comcast.

Continue Reading Below

What happened

Harmonic, Inc.(NASDAQ: HLIT) shares have kicked off Wednesday morning with a bang, jumping 20% as of 11:30 a.m. EDT after the company announced a warrant agreement with cable giant Comcast (NASDAQ: CMCSA).

So what

The agreement allows Comcast to acquire Harmonic shares dependent upon various performance metrics, such as product sales. Harmonic CEO Patrick Harshman called the deal "significant validation" and showed that Harmonic's existing relationship with Comcast is only getting stronger. Harmonic specializes in video delivery infrastructure and cable delivery.

Now what

Continue Reading Below

More specifically, the agreement grants Comcast the ability to purchase up to 7.8 million shares of Harmonic at an exercise price of $4.76, which was the weighted average share price for the past 10 days. The warrants are subject to vesting conditions that are based on pricing elections, completion of field trials, and other payments between the two companies. For instance, Comcast must agree to pay enterprise pricing for Harmonic's CableOS software.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.