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Harman’s Partnership with InterDigital to Expand its Business

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Price movement of Harman International Industries

Harman International Industries (HAR) has a market cap of $4.8 billion. HAR fell by 4.6% to close at $67.46 per share as of February 8, 2016. The stock’s price movements on a weekly, monthly, and YTD basis were -7.8%, -22.3%, and -28.0%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, HAR is trading 12.3% below its 20-day moving average, 23.2% below its 50-day moving average, and 35.7% below its 200-day moving average.

The iShares Morningstar Mid-Cap Growth Index ETF (JKH) invests 0.50% of its holdings in HAR. The ETF tracks a market-cap-weighted index of midcap companies selected by Morningstar based on their growth characteristics. The YTD price movement of JKH was -14.1% as of February 5, 2016.

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.47% of its holdings in HAR. The ETF tracks a market-cap-weighted index of midcap growth companies selected by the Center for Research in Security Prices (CRSP).

The market cap of HAR’s competitors are as follows:

  • Apple (AAPL): $526.8 billion
  • Sony Corp.–ADR (SNE): $27.6 billion
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Partnership of Harman with InterDigital

Harman International Industries has entered into a partnership with InterDigital (IDCC) to deliver a suite of oneM2M- and 3GPP-compliant end-to-end Internet of Things (or IoT) solutions to the market. This partnership is intended to provide a unique way to accelerate the definition and deployment of tailored, scalable, and interoperable IoT solutions aimed to maximize business results to its customers.

The partnership could offer IoT solutions to companies in the smart infrastructure market, including smart home, commercial real-estate, small retail, and smart manufacturing applications.

Performance of Harman International Industries in fiscal 2Q16

Harman International Industries (HAR) reported fiscal 2Q16 net sales of $1,772.2 million, a rise of 11.9% compared to net sales of $1,583.5 million in fiscal 2Q15. Sales of the connected car and lifestyle audio rose by 2.1% and 20.4%, respectively, and sales of professional solutions fell by 6.7% in fiscal 2Q16.

The company’s cost of sales as a percentage of net sales and gross profit rose by 1.5% and 10.5%, respectively, in fiscal 2Q16 compared to fiscal 2Q15. Its non-GAAP net income and non-GAAP EPS rose to $134.2 million and $1.84, respectively, in fiscal 2Q16, compared to $126.0 million and $1.79, respectively, in fiscal 2Q15.

Meanwhile, HAR’s cash and cash equivalents fell by 32.6%, and inventories rose by 26.2% in fiscal 2Q16 compared to fiscal 4Q15. Its current ratio rose to 1.43x and debt-to-equity ratio fell to 1.36x in fiscal 2Q16, compared to a current ratio and a debt-to-equity ratio of 1.36x and 1.45x in fiscal 4Q15.

Harman International Industries (HAR) declared a quarterly cash dividend of $0.35 per share on its common stock. The dividend will be paid on February 23, 2016, to each shareholder of record as of the close of business on February 8, 2016.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of HAR were 14.2x and 2.0x, respectively, as of February 8, 2016.

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