Vecima has laid off about 12% of its workforce – about 80 employees – as the supplier reorganizes following recent operator spending slowdowns and puts more emphasis on new platforms such as DOCSIS 4.0 and its virtual CMTS.
Vecima Networks, a company that has transformed itself into one of the cable industry's key suppliers, announced Monday it has cut about 12% of its workforce as part of a broader reorganization.
About 80 employees were impacted by the decision, with a portion of them taking early retirement packages, a company official said. Vecima had 612 employees at the end of September. It added roughly 50 employees via its recent acquisition of Poland-based Falcon V Systems.
The company said the layoffs are expected to result in annualized savings of about $17.5 million Canadian dollars (US$12.34 million). Vecima expects to record related reorg costs of C$3 million ($2.11 million) in Q2 of its fiscal 2025.
Vecima said the reorg includes a realignment of teams and "program investments" for various customer projects. Going forward, investments and priorities will focus on areas such as Vecima's recently introduced virtual cable modem termination system (vCMTS), next-gen PON technologies (including 50G PON) and other elements linked to cable and fiber network upgrades, according to COO Clay McCreery.
Operator spending slowdowns among culprits
Vecima said the decision to cut back comes after the company rapidly expanded its employee base and boosted inventory levels during the early phases of the COVID-19 pandemic to meet customer demand. "Supply chains have since normalized, and our customers' capital spending has become more targeted and deliberate," a Vecima official said in an emailed statement. "This reorganization ensures our use of resources and overall operational efficiency are more closely aligned with current conditions."
The buildup of inventories and delays in network upgrade plans are both attributed to a general slowdown in operator spending through the first half of 2024. However, spending is expected to perk up in the second half of 2024 and into 2025. That rebound is starting to take shape – Dell'Oro Group announced today that spending on DOCSIS infrastructure rose 26% in Q3 2024 versus the year-ago period thanks to a rise in spending on remote PHY devices and vCMTS platforms.
Another near-term concern is the buildout timing linked to the Broadband Equity Access and Deployment (BEAD) program. Speaking on Vecima's fiscal Q1 2025 earnings call last month, Vecima CEO Sumit Kumar noted that the company had "tempered expectations" for BEAD this year as it becomes increasingly clear that money for that initiative won't start to arrive in earnest until 2026.
Notably, Charter, one of Vecima's key operator partners, recently pushed out its multi-phased hybrid fiber/coax (HFC) network upgrade plan to 2027.
Other cable tech suppliers are also feeling the pinch. Harmonic, for example, recently said customer spending has slowed as cable operators push out network upgrade plans so they can assess a wave of new "unified" DOCSIS 4.0 technologies. CommScope saw a sharp decline in cable access spending in Q3 2024. But the company noted it has seen spending in some areas, such as next-gen cable amplifiers being used by Comcast, start to rise toward the end of 2024, and expects similar momentum in 2025.
No impact on Vecima's long-term plans
McCreery stressed that this week's workforce reduction does not alter Vecima's long-term plans and that its assessment of Vecima's total addressable market has not changed as operators start to put more focus on unified DOCSIS 4.0 and 50G PON technologies.
"As a company we're continuing to grow," McCreery said, noting that Vecima expects its fiscal 2025 to outpace its fiscal 2024 (Vecima's fiscal year ends on June 30) despite the headwinds seen in the first half of calendar 2024.
He noted that the bulk of DOCSIS 3.1 tech development is largely in the rearview mirror and 10G EPON tech is now mature, hence the adjusted focus on new DOCSIS 4.0 and PON tech and Vecima's new vCMTS.
The vCMTS is Vecima's "largest development piece," McCreery said. That move will pit Vecima against CommScope and Harmonic, the current vCMTS market leader.
Vecima has been investing in other areas tied to network upgrades and enhancements. Most recently, Vecima paid about C$5.8 million ($4.12 million) to acquire Falcon V Systems, a Poland-based startup that has developed a network orchestration platform and an associated test suite. Charter Communications is the initial lead customer for that pair of products.
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