Casa cuts staff, remains 'totally committed to cable'

Casa Systems confirmed that it has laid off more than 10% of its staff this week as it backs away from parts of the business with little or no return on investment. That move also emerges as the supplier of cable, cloud and wireless products and technologies strives to get closer to profitability this year.

Casa didn't say how many people were caught in the layoff and which parts of the company were impacted the most. Casa CFO and interim CEO Edward Durkin told Light Reading that the move impacted in the neighborhood of 10% and "well under 15%" of Casa's workforce across all geographies and involved "select functions" of the company.

He said this "modest right-sizing" also serves as a "final step" toward Casa's goal of returning to EBITDA profitability this year.

Figure 1: (Source: Pavel Kapish/Alamy Stock Photo)

According to its most recent 10-K filing, Casa employed 1,043 full-time employees at the end of 2022. A 12% cutback suggests a reduction of roughly 125 employees.

The focus of the cuts were on areas providing little to no return on investment "while absolutely preserving our ability to grow in 2023, 2024 and beyond," Durkin said. "We retained a lot of capacity around cable and cloud going forward across all functions – R&D, sales, marketing, etc."

The cuts also arrive as Casa continues to diversify its broader business. Casa's roots are in the cable access network, but it has since expanded into mobile and wireless, cloud services and telecom.

'Totally committed to cable'

But Durkin stressed that Casa is "totally committed to cable," the company's most profitable segment. Casa hopes to rekindle growth as operators move ahead with distributed access architecture (DAA) upgrades and employ a virtualized form of a cable converged access platform (CCAP) or cable modem termination system (CMTS).

"We all believe we're at the beginning of a cable capex spend wave driven by the MSOs as they look to deploy next-gen virtual CCAP and RPD (remote PHY) solutions."

Durkin contends that Casa is the only supplier besides Harmonic to deploy a vCCAP product. Cisco Systems' version is technically on hold. CommScope is "reenergizing" its efforts around a vCCAP. Vecima Networks, a cable access supplier gaining ground in the market, is exploring a run at the vCCAP market.

But it's unclear how much of the vCCAP market Casa has secured or might secure. Casa announced last month that it was awarded a "large" vCCAP deal with a major-but-unnamed European cable operator, with delivery expected to occur later in 2023. Casa, which has announced a vCCAP agreement with Canada's Rogers Communications, expects to announce more vCCAP deals soon.

Room for virtual CCAP traction

Meanwhile, Harmonic is definitely in the lead thanks in large part to its vCMTS deployment of Comcast and its recent win with Charter Communications.

"We think [the vCCAP market] is a great opportunity for us and we are continuing to invest heavily in cable," Durkin said.

Dell'Oro Group found that all 50 cable operators participating in a survey last year said they have either deployed or are planning to deploy a vCMTS in their networks within the next 24 months.

Casa also claims some traction for its DOCSIS 4.0-ready remote PHY node, the DA2200. Last week, it announced that the product has been deployed with some Tier 1 cable operators in North and South America, but didn't name them.

Progress on refinancing key long-term loan

Durkin also provided an update on the status of Casa's important Term Loan B, with $225 million coming due in December 2023. Casa warned last month that it might have to raise capital, sell "significant assets" or make "significant cost reduction measures" if its efforts to refinance the term loan are unsuccessful.

Casa is working with JP Morgan on amending and extending that loan. "We're making great progress and I'd expect to announce a satisfactory resolution of that in Q2," Durkin said.

Casa is also pressing forward with a search to replace company founder and former CEO Jerry Guo, who recently stepped down as CEO but remains on the board.

Durkin, who is in the mix for Guo's permanent replacement as CEO, said the process is ongoing and that the company's selection could play out over the next three to four months.

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— Jeff Baumgartner, Senior Editor, Light Reading