x
Cable modem/CMTS

Symmetricom: It's Time to Cut Back

Reflecting a condition that's inflicting many other telecom vendors, Symmetricom Inc. (Nasdaq: SYMM) unleashed a cost reduction plan this week that will eliminate roughly 100 jobs, or about 11 percent of the company's total workforce, by year's end.

Although Symmetricom expects to be hit with restructuring charges of between $6.5 million and $7.5 million, the plan should cut annual costs by roughly $7 million and help the company hit its profitability goals. (See Symmetricom to Cut 100 Jobs .) A good portion of those reduction plans are tied to Symmetricom's outsourced manufacturing facilities, and won't affect the company's core business operations, says Symmetricom director of business development Jeremy Bennington.

Analysts following Symmetricom expressed concerns about weak telco spending -- AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) are among Symmetricom's most significant customers -- but they also believe any telco shortcomings should be offset by Symmetricom's foray into the cable sector.

"We think the actions help the company maintain its earnings targets for [earnings per share of] $0.35 to $0.41" for fiscal 2008 noted Morgan Keegan & Company Inc. analyst Simon Leopold, who maintained his Market Perform rating on the stock.

Symmetricom doesn't say exactly how many dollars are coming by way of cable, but CFO Justin Spencer says about 5 percent of the company's revenues were derived from "new products" (the majority being cable-related) in the 2008 fiscal year. That's expected to jump to the range of 10 percent to 15 percent during the company's current fiscal year.

"The cable business is a very important part of our growth strategy," Spencer says.

High cable hopes
On the cable front, Symmetricom's technology is tightly integrated with the modular cable modem termination system (M-CMTS), a new CableLabs architecture that lets cable operators scale Docsis downstreams and upstreams independently. While the "core" CMTS takes care of upstream capacity, downstream is handled by edge QAMs. The Docsis Timing Interface (DTI) ensures that the clocks of those separate devices are properly synched up.

CableLabs blessed Symmetricom's DTI server, the TimeCreator 1000, in 2006. So far, Symmetricom has encountered little competition in the product category. (See CableLabs OKs First Modular CMTS Element .)

Last year, Symmetricom looked to broaden its MSO ambitions with a video quality monitoring platform tailored for cable, casting an emphasis on video-on-demand (VoD) and switched digital video (SDV) applications. (See Symmetricom Expands Cable Play.)

Last October, before the initial brunt of an economic slowdown was felt by anyone, Symmetricom president and CEO Tom Steipp noted in the company's fiscal first-quarter earnings call that trials for the V-Factor system were underway at six "major" U.S. operators, but warned that it could take another couple of quarters to pinpoint the "demand profile" for the product.

While questions remain about the success of V-Factor, deployments of the company's DTI servers are well underway.

Last fall, Steipp reported that Symmetricom had shipped TimeCreator gear to more than 10 major MSOs, with a rough split between U.S. operators and those based abroad. Symmetricom has announced a deal with South Korea's SK Broadband, but is almost certainly involved with Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s deployments of Cisco Systems Inc. (Nasdaq: CSCO)'s M-CMTS implementation and the MSO's aggressive rollout of Docsis 3.0. (See Comcast Enters the Wideband Era and Comcast Wraps Up '08 Wideband Rollout .)

But MSOs aren't going with the modular approach solely in tandem with Docsis 3.0 deployments. Several of them are deploying M-CMTS so they can reduce CMTS downstream port costs as they bump up speed tiers for their single-channel Docsis 1.1 or Docsis 2.0 networks, Bennington says, noting that three of the top four U.S. cable MSOs are already using the M-CMTS in such scenarios.

— Jeff Baumgartner, Site Editor, Cable Digital News

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE