Harmonic Announces Preliminary Third Quarter Results.

Business Editors/High-Tech Writers

SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 4, 2000

Harmonic Inc. (Nasdaq:HLIT) today announced preliminary results for the quarter ended September 29, 2000. The Company expects to report revenue of approximately $71.0 million to $73.0 million for the third quarter. Excluding purchase accounting adjustments for such items as amortization of goodwill and other intangibles, the Company expects to report a pro forma net loss for the quarter of approximately $0.06 to $0.09 per share. These results are preliminary and the Company expects to announce actual results on October 18, 2000.

Harmonic's Broadband Access Networks (BAN) division, which designs, manufactures and markets fiber optic products used extensively in broadband cable networks, expects revenue of approximately $43.5 million to $44.5 million for the quarter, compared to divisional revenue of $53.2 million in the previous quarter. The sequentially lower BAN revenue levels reflect slower sales across the Company's worldwide base of cable customers.

The Company anticipates that the Convergent Systems (CS) division, which designs, manufactures and markets digital headend systems for a variety of broadband networks, will achieve revenue of approximately $27.5 million to $28.5 million, compared to divisional revenue of $26.8 million in the previous quarter. During the quarter, the Company announced several major wins for the CS division, including a contract to provide headend technology for BellSouth's digital satellite direct-to-home deployment.

"While we are disappointed with the slowdown in our business, our worldwide base of cable customers continues to work closely with us to execute their long-term plans to upgrade and expand their broadband infrastructures," said Anthony J. Ley, Chairman, President and Chief Executive Officer. "We continue to see growing interest by a variety of network operators in our new optical systems and digital headend products. We believe that Harmonic is increasingly well-positioned to provide the channel capacity and bandwidth management solutions required to offer digital video, high-speed data and other advanced services. While we expect to also report a pro forma net loss in the fourth quarter of 2000, we anticipate increasing sales levels in the coming year."

Including the effects of purchase accounting adjustments, the Company expects to report a net loss on a GAAP basis for the third quarter of approximately $1.63 to $1.66 per share. These adjustments arise from the acquisition of the DiviCom business from C-Cube Microsystems Inc. on May 3, 2000 and the acquisition of Cogent Technologies Inc. on July 1, 2000.

A live Internet broadcast of Harmonic's preliminary third quarter conference call (2:00 P.M. Pacific/5:00 P.M. Eastern) will be available today at www.harmonicinc.com under "Investor Relations" or by calling 888/368-4280. Until October 6th, a replay will also be available either at www.harmonicinc.com or by calling 800/642-1687.

About Harmonic Inc.

Harmonic is a leading provider of innovative broadband solutions that deliver video, voice and data to communications providers around the world. Harmonic's technically advanced fiber optic, digital video and IP data delivery systems enable network operators to provide a range of interactive and advanced digital services that include high-speed Internet access, telephony, digital video, HDTV, video and audio streaming, and video-on-demand.

Headquartered in Sunnyvale, Calif., Harmonic employs approximately 950 people and operates more than 15 R&D and sales & system integration centers globally. Harmonic's customer base includes the world's largest communications providers. Harmonic's stock is traded on the Nasdaq stock market under the symbol "HLIT." For more information, see the company's website at www.harmonicinc.com.

The anticipated results described in the above paragraphs constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of risks and uncertainties which would cause actual results to differ materially from those projected, including final determination of revenue, actual costs and expenses incurred during the quarter and decisions regarding reserves and allowances made in the normal course of the accounting close for the quarter, which at this time is not yet complete. This release contains other forward-looking statements, including statements concerning long term plans of cable customers, growing interest in new optical systems and new digital headend products, a pro forma net loss for the fourth quarter of 2000, and increasing sales levels in the coming year. These forward-looking statements are also subject to risks and uncertainties which would cause actual results to differ materially from those projected. Those risks include competitive conditions, market acceptance of new or existing products, unpredictable sales cycles, cable and satellite industry capital spending, and difficulties associated with integrating operations in a timely manner. Additionally, risks are detailed in the Company's filings with the Securities and Exchange Commission, including its 1999 Annual Report on Form 10-K and 10-K/A and Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and its reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

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