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July 27, 2020
After a slow start to 2020, MaxLinear expects to turn in a solid third quarter due in part to "tailwinds" coming from its cable data business as people continue to conduct business from home during the pandemic.
"We are benefiting from the demand for greater bandwidth at home in a transformative work-from-home environment that we believe is an emerging long-term trend," Kishore Seendripu, MaxLinear's CEO, said last week on the company's third-quarter earnings call.
According to the latest data from the NCTA COVID-19 Dashboard, which tracks data from several large and midsized US cable operators, peak upstream traffic has climbed 23.6% since March 1, and risen 9.4% on the downstream side during that span.
Seendripu noted that demand for cable data products is coming from a broad set of MSOs, especially in North America. "We are seeing, in general, a very healthy booking for Q3 and beyond. So we feel very good that the recovery is in progress right now."
He also said MaxLinear expects to close its $150 million acquisition of Intel's home gateway business sometime in the third quarter, noting that the regulatory hurdles have been cleared.
The acquisition should shore up and expand MaxLinear's DOCSIS modem and gateway business and present a hungrier competitor to Broadcom in that market. The deal also puts MaxLinear in position to take greater part in the PON customer premises equipment (CPE) market and enable it to enter the Wi-Fi chip business as next-gen Wi-Fi 6 and 6e technologies start to take hold.
Among specific cable product types, Seendripu said MaxLinear is accelerating work around the XB7, a next-gen DOCSIS 3.1 gateway specified by Comcast (and for Comcast's technology syndication partners) that also supports Wi-Fi 6 and MoCA 2.0, a coax-based home networking platform that handles data speeds up to 1 Gbit/s. The initial version of the XB7, a third-gen D3.1 gateway, is made by Technicolor and is believed to be equipped with silicon from Broadcom.
MaxLinear expects its D3.1 gateway market to shift to the XB7 "very, very rapidly," Seendripu said.
MaxLinear posted Q2 2020 revenues of $65.2 million, well off of year-ago revenues of $82.5 million, but up 5% from Q1 2020. Its connected home unit, which also includes MoCA silicon, represented 45% of revenues.
Seendripu noted that MaxLinear did see some "pockets of weakness" due to the pandemic, particularly in the wireless backhaul markets, in Q2. However, the company has begun to sample a second-gen 8x8 MIMO 5G wireless RF transceiver, and expects the wireless frontload and backload transport market to start picking up in Q3.
MaxLinear expects Q3 2020 revenues in the range of $72 million to $76 million, up 13.5% on a sequential basis, with a 20% rise in its connected home division. MaxLinear's Q3 2020 guidance does not include the still-pending acquisition of Intel's home gateway business.
"The broadband business … has seen a nice recovery in 2020, but the work-from-home environment is driving an acceleration of this recovery," Steve Litchfield, MaxLinear's CFO and chief corporate strategy officer, said.
— Jeff Baumgartner, Senior Editor, Light Reading
Senior Editor, Light Reading
Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.
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