Cable capacity spending perked up in Q4, Casa says

After a rocky first nine months of 2019, the last quarter of the year proved to be a smoother one for Casa Systems, a maker of cable network infrastructure gear and wireless products.

Cable-related Q4 revenues of $54.5 million were lower than typically seen in the period, but were an improvement from Q3 2019 and higher than Casa initially projected, company CEO Jerry Guo said on Thursday's earnings call.

Guo said the improvement came through cable operators meeting demand or bulking up on capacity prior to any large-scale distributed access architecture (DAA) deployments and future rollouts of virtualized converged cable access platform (vCCAP) cores. The vast majority of Casa's Q4 cable revenues came from integrated CCAP hardware and software capacity upgrades, he said.

The bigger story underway at Casa involves its efforts to diversify a business that, in 2018, was almost entirely tied to cable. Aided by its $115 million acquisition of NetComm last year, Casa has been building out a wireless business in anticipation of 5G.

Wireless revenue in Q4 was $36.9 million, including $20 million from NetComm fixed wireless products.

For all of 2019, 65% of Casa's revenue (or $182.9 million) came from cable, while 21% (or $59.9 million) came from its wireless business, and 14% ($39.5 million) originated with fixed telecom customers. NetComm contributed about $36.4 million to Casa in 2019 during the second half of the year (Casa acquired NetComm in July 2019).

Casa currently sees no impact on its supply chain and its business in the Asia Pacific stemming from the outbreak of the new coronavirus.

Casa has inventory built up across its product lines, including cable and wireless, said Scott Bruckner, Casa's interim CFO and SVP of strategy and corporate development. "We at this point feel pretty comfortable that while there may be some supply disruptions, we've kind of built a moat around that for the better part of this year," he added.

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— Jeff Baumgartner, Senior Editor, Light Reading