The surprise departure of a key CommScope executive this week enters the picture as the supplier of broadband and wireless gear is evaluating all aspects of the company and could portend that major changes lie ahead.
That move, announced Monday, was the stepping down of Morgan Kurk, a long-time CommScope exec who had been serving as chief technology officer and as the segment leader of CommScope's Broadband Networks unit.
CommScope did not elaborate on the reasons for Kurk's departure. But it did announce that Tom Cloonan, currently CTO of CommScope's Broadband Networks segment and an exec who joined CommScope via its 2019 acquisition of Arris, has been appointed CTO of CommScope on an interim basis as it "evaluates its longer-term strategic requirements of the CTO office."
Kurk's departure comes at a tricky time at Carlyle Group-backed CommScope, which is now led by Chuck Treadway, an exec who succeeded former CEO Eddie Edwards last fall. CommScope is currently pushing ahead with "CommScope NEXT," an initiative that will culminate in a review of the company's full business, with a focus on growth, cost optimization and portfolio optimization. CommScope has stressed that the plan could involve sales of assets as well as strategic acquisitions.
Among the results of that initiative so far is the planned spin-out of CommScope's Home Networks unit, a division that makes and sells a wide range of video and broadband-focused customer premises equipment (CPE). CommScope has stressed that it would be open to other options for its Home Networks unit should the right opportunity emerge. It's been rumored that private equity firms are among those that have taken a close look at CommScope's Home Networks business.
Cloonan, Kurk's interim replacement, is a well-known and well-regarded cable industry vet whose roots go back to Bell Labs. Cloonan has played a pioneering role in the development of new DOCSIS networking technologies during his time at Arris.
Analyst puzzled by tech leadership move
Despite Cloonan's broadband pedigree, the unexpected CTO transition does raise questions about CommScope's future in 5G and adds a layer to risk as the company moves forward with a wide-ranging strategic reset, according to Raymond James analyst Simon Leopold.
"Although less impactful than a CEO or CFO change, as a general principle, we regard unexpected C-level transitions as presenting a risk," Leopold wrote in a research note, adding that Kurk was once viewed as a candidate to succeed then-CEO Eddie Edwards, and had expected Kurk to eventually re-emerge in a leadership position elsewhere at the company.
"Although we expected the strategic review could trigger cost-cutting actions and possible reorganization, Kurk's departure surprises us," Leopold added. "We find it a bit puzzling that CommScope is swapping a Mobility expert with a Broadband expert in the CTO spot. This is not to suggest Cloonan lacks the ability, but we envision 5G as the most promising driver for CommScope, so the subtle message confuses us. In speaking with CommScope management, we believe it continues to assess its internal structure."
Leopold said he could imagine a scenario in which each business unit of CommScope has its own CTO.
Among other moves, CommScope also announced Monday that Ric Johnsen, currently senior vice president of CommScope's Converged Network Solutions (CNS) business, would take the helm of the company's Broadband Networks segment. Johnsen, who joined CommScope more than a decade ago, is the former president and CEO of Alloptic, a maker of PON and RF gear acquired by CTDI in 2010.
"We are making progress on our CommScope NEXT initiative, optimizing our portfolio and cost structure and driving toward growth that outpaces the market," said CommScope in a statement. We are fortunate to have the best employees in the industry and a deep bench of talent. Tom and Ric are emblematic of that talent."
CommScope is scheduled to present and discuss its Q2 2021 results, as well as a progress report on the company's ongoing evaluation of its overall business, on August 5.
- CommScope to spin off Home Networks unit
- Tom Cloonan named interim CTO of CommScope
- New CommScope CEO gets loads of time to formulate a 'reset'
- Hitting the upstream 'sweet spot' with DOCSIS 4.0
- CommScope struggles with supply and demand for set-tops and gateways
- CommScope open to other alternatives for Home Networks unit
— Jeff Baumgartner, Senior Editor, Light Reading