Press Release

Record Revenue Driven By Growth Across International Regions and in the Broadcast and Media Markets

San Jose, Calif. - January 31, 2012 - Harmonic Inc. (NASDAQ: HLIT), a global leader in video infrastructure solutions, today announced its preliminary and unaudited results for the quarter and year ended December 31, 2011. Results for the entire year of 2011 and for the fourth quarter of 2010 include full quarterly contributions from Omneon Inc., which was acquired on September 15, 2010.

Net revenue for the fourth quarter of 2011 was $143.6 million, up 4% from $138.2 million in the fourth quarter of 2010. International sales represented 57% of total revenue for the fourth quarter of 2011. Total bookings in the fourth quarter of 2011 were approximately $142.0 million, up from approximately $134.8 million for the fourth quarter of 2010.

For the full year 2011, GAAP net revenue was $549.3 million, up from $423.3 million for 2010, Pro forma annual revenue, which includes revenue from Omneon and certain deferred revenue excluded in GAAP results for both years, was $551.4 million for 2011, up 8% from $509.0 million for 2010.

The Company reported GAAP net income for the fourth quarter of 2011 of $4.3 million, or $0.04 per diluted share, compared to a net loss of $13.7 million, or ($0.12) per diluted share, for the fourth quarter of 2010. For the full year 2011, GAAP net income was $8.8 million, or $0.08 per diluted share, compared to a net loss of $4.3 million, or ($0.04) per diluted share, for 2010.

Non-GAAP net income for the fourth quarter of 2011 was $14.0 million, or $0.12 per diluted share, up from $12.5 million, or $0.11 per diluted share, for the same period of 2010. For the full year 2011, non-GAAP net income was $47.5 million, or $0.41 per diluted share, up from $36.4 million, or $0.35 per diluted share, for 2010. See “Use of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Net Income (Loss) Reconciliation” below.

For the fourth quarter of 2011, Harmonic had GAAP gross margins of 47% and GAAP operating margins of 5%, compared to 44% and (2%), respectively, for the same period of 2010. Non-GAAP gross margins and non-GAAP operating margins were 51% and 13%, respectively, for the fourth quarter of 2011, comparable to the fourth quarter of 2010.

As of December 31, 2011, the Company had cash, cash equivalents and short-term investments of $161.8 million, up from $140.9 million as of September 30, 2011 and $120.4 million as of December 31, 2010.

“We delivered record revenue for the fourth quarter and the full year of 2011,” said Patrick Harshman, president and chief executive officer of Harmonic. “During the year, our growth was primarily driven by increased video processing wins across our expanding global customer base, with video processing revenue up 17% and international revenue up 14% on a pro forma basis. Our successful integration of Omneon also extended our business into new markets, driving significant growth in our broadcast and media revenue, up 17% on a pro forma basis.

“We move into 2012 with broad technological and market leadership, and proven expertise in enabling our global customers to produce and deliver compelling new high-definition, on-demand and Internet-based video services. We believe the global proliferation of video content and media outlets, along with increasing demand for higher quality video in every format delivered over bandwidth constrained networks, plays into our core strengths.”

Business Outlook
Harmonic anticipates net revenue to be in the range of $132 million to $142 million for the first quarter of 2012, which is historically the Company’s slowest quarter for the year. GAAP gross margins and operating expenses for the first quarter of 2012 are expected to be in the range of 45% to 47% and $61 million to $63 million, respectively. Non-GAAP gross margins and operating expenses for the first quarter of 2012, which will exclude charges for stock-based compensation and the amortization of intangibles, are anticipated to be in the range of 50% to 52% and $55 million to $57 million, respectively.

Conference Call Information
Harmonic will host a conference call today to discuss its financial results at 2:00 P.M. Pacific (5:00 P.M. Eastern). A listen-only broadcast of the conference call can be accessed on the Company’s website at www.harmonicinc.com or by calling +1.706.634.9047 (conference identification code 51971320). The replay will be available after 6:00 P.M. Pacific at the same website address or by calling +1.404.537.3406 (conference identification code 51971320).

About Harmonic Inc.
Harmonic Inc. (NASDAQ: HLIT) provides infrastructure that powers the video economy. The company enables content and service providers to efficiently create, prepare, and deliver differentiated video services for television and new media platforms. More information is available at www.harmonicinc.com.

Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements related to our expectations regarding: our final results for the fourth quarter and year ended December 31, 2011; our momentum, broad technological and market leadership and proven expertise, which enables our global customers to produce and deliver compelling new high-definition, on-demand and internet-based services; the global proliferation of video content and media outlets, and increased demand for higher quality video in every format delivered over bandwidth constrained networks, which plays into our core strengths; and net revenue, GAAP gross margins, GAAP operating expenses, non-GAAP gross margins and non-GAAP operating expenses for the first quarter of 2012. Our expectations regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include the possibility, in no particular order, that: the trends toward more high-definition, on-demand and anytime, anywhere video will not continue to develop at its current pace, or at all; the possibility that our products will not generate sales that are commensurate with our expectations or that our cost of revenue or operating expenses may exceed our expectations; the mix of products and services sold in various geographies and various markets and the effect it has on gross margins; delays or decreases in capital spending in the cable, satellite and telco and broadcast and media industries; customer concentration and consolidation; the impact of general economic conditions, including as a result of recent turmoil in the global financial markets, particularly on our European and other international sales and operations; our ability to develop and introduce new and enhanced products and market acceptance of new or existing Harmonic products; losses of one or more key customers; risks associated with Harmonic's international operations; inventory management; the lack of timely availability of parts or raw materials necessary to produce our products; the impact of increases in the prices of raw materials and oil; the effect of competition; difficulties associated with rapid technological changes in Harmonic’s markets; risks associated with unpredictable sales cycles; our dependence on contract manufacturers and sole or limited source suppliers; the effect on Harmonic’s business of natural disasters; and the risks that our international sales and support center will not provide the operational or tax benefits that we anticipate or that its expenses exceed our plans. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Harmonic’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2010, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. The forward-looking statements in this press release are based on information available to the Company as of the date hereof, and Harmonic disclaims any obligation to update any forward-looking statements.

Editor's Note: Product and company names used herein are trademarks or registered trademarks of their respective owners.

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