Light Reading
Equipment vendor reports steady wireless market gains but declines in both enterprise and broadband segments for fourth quarter.

CommScope Suffers Broadband Slump

Alan Breznick
2/21/2014
50%
50%

CommScope is not getting a lot of love from the cable broadband market these days. In its second quarterly earnings report since going public again with a 4,437 million IPO in late October, CommScope Inc. reported net sales of $846.6 million, nearly flat with $848.2 million a year ago.

It also reported adjusted net income of $54 million, or 30 cents per diluted share, up on a total income basis, although down slightly from the year-earlier period on a per share basis. Financial analysts who cover the company generally praised the company's performance for the final quarter and the year, highlighting the gains of its main wireless equipment segment. (See CommScope Settles for Reduced IPO Price.)

But what those healthy overall figures mask is that CommScope's smaller broadband unit suffered at least its second straight double-digit percentage decline in the fall. The company's broadband segment sales dropped to $109 million, down 13% from $125 million in the last quarter of 2012. Worse yet, its broadband unit posted an operating loss of $3 million for the quarter, after registering a $7.5 million gain a year earlier.

The twin declines came after CommScope endured a 16% drop in broadband segment revenues to $125 million in the third quarter. Adjusted net income for the segment fell 69% to $4 million in the summer period on a year-over-year basis.

CommScope blamed the continuing broadband shortfalls primarily on "lower sales volumes and less favorable pricing and mix of products sold." The company, which plays in the cable, fiber, and access network space, hawks such prime products as coaxial cable, fiber cable, cable in conduit, FTTX solutions, and edge QAM devices. In addition, it has been trying to expand into the emerging market for next-gen Converged Cable Access Platform (CCAP) devices along with such established rivals as Cisco Systems Inc. (Nasdaq: CSCO), Arris Group Inc. (Nasdaq: ARRS), and Harmonic Inc. (Nasdaq: HLIT), as well as such startups as Casa Systems Inc. and Gainspeed .

On their earnings call with financial analysts late Thursday, CommScope officials made it clear that they consider such results unacceptable. They said they have been taking steps to turn around the broadband unit's performance, including instituting a series of "cost reduction" programs. They did not disclose whether those programs include employee layoffs.

"We have work to do in broadband," said CommScope President & CEO Eddie Edwards. "We're totally committed to making that happen."

As a result of such steps, CommScope executives said they expect to see the broadband division post better adjusted net income results in 2014. But they don't seem to hold out much hope of a great broadband revival any time soon, just a leveling off of the losses from the smallest and most mature of its three divisions.

Consider the following two examples. First, unlike their counterparts at Harmonic and Arris, who highlighted their progress with CCAP trials and deployments on their latest earnings calls, CommScope executives made no mention of progress on that front despite having debuted two CCAP chassis at the SCTE Cable-Tec Expo show in October, and talking then about MSO field tests and deployments… (See CommScope Seeds New CCAP With MSOs.)

Second, when asked by analysts about the prospects for cable Ethernet PON (EPON) and DOCSIS Provisioning of EPON (DPoE) products -- which the company has promoted heavily in the past -- CommScope executives indicated that they might consider a change in direction later this year. The company introduced optical line terminals (OLTs) and optical network units (ONUs) for both EPON and GPON at the SCTE Cable-Tec Expo show in fall 2012.

"I think that's a work in progress at this point," Edwards said. He added that "the next few months will tell" how far the company should proceed with those products.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/28/2014 | 5:07:00 PM
Re: CommScope &^ CCAP
Of course, now that i've said that Commcope will probably announce some major CCAP deal or deploiyment somewhere. They've been almost too quiet about CCAP. We shall see. 
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/26/2014 | 9:41:49 PM
CommScope &^ CCAP
On the earnings call last week, I got the feeling that CommScope may bug out of the CCAP market now. In fact, I wouldn't be surprised if CommScope decided to sell off its whole broadband unit in a year or two. With the wireless market attracting most of its attention, the company's head and heart just don't seem to be in cable anymore. What do you think? 
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
LRTV Documentaries
The Rise of Virtual CPE

1|27|15   |   01:38   |   (5) comments


As NFV strategies evolve from tests and trials to production telco networks, expect to hear a lot about virtual CPE (customer premises equipment) rollouts during 2015.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Heavy Reading's Graham Finnie about the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control – and sign up for
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Google Continues Gigabit Expansion
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/27/2015
Comcast Apologizes to 'A**hole' Brown
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/29/2015
US Ops Spend $32.5M to Bring 4G to Chicago's Subways
Sarah Thomas, Editorial Operations Director, 1/30/2015
Cablevision's New WiFi Try – Freewheeling Enough?
Mari Silbey, Independent Technology Editor, 1/26/2015
Overture Builds on NFV Foundation
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/27/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Weekly Executive Interview
Join us live for Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he has to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.