Supply-chain constraints are creating chip shortages and shipment delays to the point that Casa Systems is predicting the company won't see any growth from its cable unit this year.

"Currently, we are seeing supply-chain shortages related to our cable products of up to 12 months. So, we do not expect to see growth in our cable revenue during 2022," Jerry Guo, Casa's CEO, said on the company's recent fourth quarter earnings call.

Figure 1: Supply-chain constraints resulted in a $29 million hit at Casa Systems for all of 2021.
(Source: Xinhua/Alamy Stock Photo)

Guo said the impact is being felt in some new cable product lines, including remote PHY nodes that are among the elements cable operators will use to deploy a distributed access architecture (DAA) that pushes key electronics toward the edges of the hybrid fiber/coax (HFC) network. DAA is also a prerequisite to DOCSIS 4.0, an emerging platform for HFC networks that will support symmetrical multi-gigabit speeds along with enhanced security and low-latency capabilities.

Cable product growth isn't Casa's problem alone, as the whole cable-tech sector is seeking a jolt. Dell'Oro Group's latest five-year forecast sees relatively flat spending on cable equipment, even with DAA and DOCSIS 4.0 network upgrades still on the horizon.

Guo stressed that Casa is making some progress with next-generation cable products focused on network virtualization and DAA. Of recent note, Canada's Rogers Communications tapped Casa to help deliver broadband services powered by the company's virtual Converged Cable Access Platform (vCCAP) and its DAA nodes. Rogers appears to be sharing the wealth, as it has also selected Harmonic's "CableOS" and remote PHY nodes.

Strategic pivot focused on wireless

Casa's cable business is feeling the pain from the supply chain as the company plows ahead with its transformation as a wireless network tech company. Casa, which cut its teeth as a cable access network technology company, said wireless emerged as its largest source of revenue in Q4 2021. Casa ended 2021 with 47 wireless customers, up from 28 at the end of 2020.

Casa's wireless and mobile portfolio includes 4G/5G core and radio access network (RAN) products, as well as fixed wireless equipment. Casa entered the fixed wireless device business in 2019 through the acquisition of NetComm Wireless. Mediacom Communications is using Casa's evolved packet core and fixed wireless access systems to help power Mediacom Bolt, a relatively new fixed wireless broadband service that taps into licensed CBRS spectrum that Mediacom secured at auction.

Alongside Casa's ongoing emphasis on mobile and wireless, Guo generally characterized 2022 as a "transition year" for Casa. The company, he explained, will focus on growing its cloud software revenues and scaling back its lower-margin hardware products. That will result in lower hardware revenues paired with higher margins and profitability, he predicted.

Financial snapshot

Though Casa's cable unit appears to be taking the brunt of the impact from supply-chain disruptions, pain is being felt across the board. Guo said supply-chain issues resulted in a $29 million hit at Casa for full 2021.

Casa posted Q4 2021 revenues of $105.09 million, down from a year-ago total of $120.52 million due to the aforementioned component shortages and shipping delays. Casa's Q4 revenues still beat analyst expectations of $103.8 million.

Wireless products were the bright spot, as Q4 revenues in that category reached $54.15 million, up from $48.26 million in the year-ago period.

Casa pulled in cable product revenues of $22.96 million in Q4 2021, down from $37.04 million a year earlier. Fixed telco revenues also declined – to $14.80 million in Q4 2021 from $21.14 million in the year-ago quarter.

The company has a search underway for a new chief financial officer. Casa's current CFO, Scott Bruckner, is leaving in April. Casa announced last month that Bruckner is exiting the company "to attend to family issues," and it was "not based on any disagreement with or irregularities in the company's accounting principles, practices or financial statement disclosures."

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— Jeff Baumgartner, Senior Editor, Light Reading