recently announced that it has acquired Israel-based iOnRoad
Technologies, a developer of vehicle safety software. However,
Harman did not provide any monetary details of the
iOnRoad develops software for Advanced Driver Assistance
Systems ("ADAS"), which run on any platform including
Windows as well as on open systems such as Linux.
The iOnRoad app is quite popular with vehicle owners as
more than a million users have already downloaded it
through Google Play and Apple iTunes. Harman said that it will
continue to sell the app through both these platforms going
iOnRoad is Harman's second acquisition for its Infotainment
segment. Earlier, in Aug 2012, the company acquired Bangalore,
India-based Interchain Solution, which offers products and
technology solutions for automotive infotainment and
The iOnRoad acquisition is expected to bolster Harman's
position in the Infotainment systems and services market. The
iOnRoad acquisition will not only expand Harman's product
portfolio but will also boost its Infotainment segment's top line
in the near term.
In the second quarter of 2013, Infotainment revenues decreased
10.0% year over year and 3.7% sequentially to $540.0 million. The
decline reflected lower automotive production volumes in Europe,
primarily due to weak demand.
To drive growth, Harman announced a new division called
Infotainment services that will serve its customer base of 15
million. The division will offer fourth generation long-term
evolution ("4G/LTE") technologies to vehicles currently on road,
cloud-based services to cars and customer relationship management
We believe that Harman's new manufacturing capacities, growing
product pipeline, solid patent portfolio, new awards as well as
launch of new products will boost its top line and profitability
over the long term.
However, tough competition and sluggish macroeconomic
environment particularly in Europe may hurt its profitability in
the near term.
Currently, Harman has a Zacks Rank #3 (Hold).
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