Casa Systems May Go It Alone
Although vendors of various shapes and sizes flirted with Casa when it appeared to be a perpetual acquisition candidate, recent funding-related moves and budding market opportunities indicate that the cable modem termination system (CMTS) startup will try to seek its fortunes as an independent company.
Earlier speculation held that Casa had been seeking a buyer for several months, drawing looks from Alcatel-Lucent (NYSE: ALU), Huawei Technologies Co. Ltd. , Juniper Networks Inc. (NYSE: JNPR), and others that were interested in pursuing the next-gen CMTS market. (See Open House at Casa Systems?)
SeaChange International Inc. (Nasdaq: SEAC)'s recent divestment of its nearly 20 percent stake in Casa added fuel to those thoughts, because it would clear the way for Casa to pursue M&A activity relatively unencumbered by a sizable stakeholder that also sells equipment and software to MSOs and other carriers. (See SeaChange Sheds Stake in Casa Systems.)
But the likelihood that a Casa sale would occur anytime soon dampened late last month, when Summit Partners announced it had made an undisclosed investment in Andover, Mass.-based Casa, which is still the only vendor to obtain "full" Docsis 3.0 CMTS qualification from CableLabs . (See CableLabs Cheers Casa Chassis.)
Casa Systems has not responded to questions from Light Reading Cable but the vendor's CEO, Jerry Guo, did claim in the funding release that the company has "experienced tremendous growth in the last 18 months" and that the new backing of Summit will allow the company to pursue "an even more aggressive growth strategy in both domestic and international markets."
The company, he added, "went from shipping a few CMTS downstream channels a few years ago, to shipping more than 8,000 CMTS downstream channels in the first quarter of 2010."
That's a nice total for a CMTS newcomer trying to elbow its way into the market, but it's still well behind the sector leaders. Arris Group Inc. (Nasdaq: ARRS), by comparison, shipped 33,992 CMTS downstreams in the first quarter of 2010.
Casa has kept its deployments close to the vest, but most of its early traction has come from outside the US. Casa's known customers in Europe include UPC Broadband and Ziggo B.V. It's also got a foothold in China with Guangzhou Digital Media Group. (See Chinese MSO Does IPTV With Microsoft and Casa's Got a Deal in the House .)
Fresh funding from a growth equity investor and the potential for CMTS deals abroad have apparently altered Casa's earlier thoughts on an exit strategy.
"They feel like they can be independent and get another opportunity in the market," Infonetics Research Inc. directing analyst of broadband and video Jeff Heynen told Light Reading Cable last week at The Cable Show in Los Angeles. "They think they have a two-year window to get their customer base."
Heynen says the Chinese cable market, which counts 160 million TV subs, represents one of the most lucrative opportunities ahead for Casa as MSOs there start to buy CMTSs en masse for broadband upgrades.
"Density and cost are the name of the game, especially in China," he adds, noting that those two factors could work in Casa's favor as it bids for business against fellow CMTS competitors Arris, Cisco Systems Inc. (Nasdaq: CSCO), and Motorola Inc. (NYSE: MOT).
— Jeff Baumgartner, Site Editor, Light Reading Cable