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DOCSIS

Casa Systems seeing 'no impact' from COVID-19 on Q1

Offering a glint of good news amid the gloom, cable and wireless infrastructure vendor Casa Systems said it expects "no impact" to its first quarter 2020 operations due to the COVID-19 outbreak.

"Globally, all of the Company's manufacturing facilities are fully operational, and we are working with our supply chain to augment inventory to meet increased customer demand," the company said in a statement.

Casa, which counts Charter Communications among its top customers, noted that it has also put in place business continuity plans to help mitigate potential future disruption to its business.

"We continue to watch our business very closely for any effects of COVID-19 and are working to meet heightened customer demand due to increased network traffic," Casa CEO Jerry Guo said in a statement. Casa shares jumped 39 cents ($12.91) to $3.41 each Wednesday, and were up more than 8% in after-hours trading.

Casa's announcement comes on the heels of an improved fourth quarter of 2019 for the vendor, which followed a rough first nine months of 2019 as service providers reined in spending.

CommScope, a competitor to Casa in both the wireless and cable markets, also had some positive news to share, according to Raymond James analysts, which recently held a "virtual" gathering with several CommScope execs.

"Management singled out increased demand by service providers, particularly cable operators, in upgrading and increasing their upstream capacity," Simon Leopold, analyst with Raymond James, wrote in research note distributed this morning.

He noted that it will be easier for operators to add capacity to an existing network rather than adopting new architectures or switching suppliers, a scenario that favors an incumbent vendor such as CommScope. "In some cases, the upgrade leads to a sale of a high margin software license or an upgrade to a deployed system," Leopold added, noting that CommScope's March quarter "has remained largely as expected."

CommScope has already altered guidance for Q1 2020, anticipating a $60 million hit on profits, due to the outbreak of the new coronavirus and its impact on the global supply chain and the company's manufacturing capacity in China.

The overall cable infrastructure market could use a boost after a dismal 2019 that saw total "cable access concentrator" revenue drop 30% to $255 million due to slower operator spending, ongoing decisions about next-gen network moves and the lack of broadband competition in some markets, according to Dell'Oro Group.

Jeff Heynen, Dell'Oro's senior research director, broadband access and home networking, told Light Reading earlier this month that spending in that category, which includes DOCSIS infrastructure, software licenses and distributed access architecture (DAA) nodes and modules, could be flat or up as much as 4% in 2020.

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— Jeff Baumgartner, Senior Editor, Light Reading

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