Scopia is not historically an activist investor. However, activist investor Jerome Lande folded his operations into Scopia for the purpose of operating an activist portfolio within the firm and giving activist advice and support on Scopia's larger portfolio, which is a traditional long-short fund.
There has been a great deal of consolidation in the Video business. Ericsson divested its MediaKind business to One Equity, Cisco sold its Service Provider Video Software Solutions business to Permira Funds and Amazon bought a similar type of business. There could be many companies out there who might be interested in Harmonic's Video business, and this has also been an area that has seen PE interest.
So, the company is approaching an inflection point and Scopia wants to make sure they are taking these opportunities seriously. Scopia is in a unique position to monitor the company's progress and will be watching to make sure management is exploring a separation of the businesses while efficiently operating them. If Scopia needs to step in, they have a call option on two board seats.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.