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CommScope revenue plunged and the company posted a net loss in Q4 2023
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Executives blamed overstocked inventories and shifting DOCSIS 4.0 timelines for low demand
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BEAD spending could provide some relief
CommScope CEO Chuck Treadway’s voice almost said it all during the company’s Q4 2023 earnings call on Thursday. Things in Q4 weren’t good. And they’re about to get worse.
The executive warned all of CommScope’s segments are facing an uphill battle against sluggish market demand. While it managed a slight uptick in order volumes in its Connectivity and Cable Solutions (CCS) and Outdoor Wireless Networks (OWN) businesses in Q4, Treadway said it felt the full force of downward pressure in its Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS) segments in Q4.
The result? Segment revenue was down double digits year on year across the board. Consolidated revenue plummeted 38% year on year to $1.18 billion and the company came away from the quarter with a net loss of $339 million.
The first quarter of this year isn’t looking any brighter. Treadway warned investors CommScope is expecting the first half of 2024 to be “very difficult.”
He pointed particularly to lower demand for its Ruckus portfolio within NICS and reduced order volumes for DOCSIS and other access kit within ANS as contributors to an expected sequential decline between Q4 2023 and Q1 2024.
In the ANS segment, Treadway said the lower volumes stemmed from slower than expected DOCSIS 4.0 rollouts among its customers. Presumably, he was referring to Charter Communications, which recently pushed back its DOCSIS timeline from 2025 to 2026.
“Some of our customers have announced slower than expected ramps on their DOCSIS 4.0 upgrade projects,” he stated. “As a result of these two issues, order rates and revenues will be negatively impacted in the first few quarters.”
That said, Treadway said CommScope’s full duplex (FDX) amplifier product line is expected to be one of the bright spots in the ANS business. Specifically, he noted CommScope “expect[s] to start seeing significant [FDX] shipments in the second half of this year.”
His comments are notable given the FDX flavor of DOCSIS 4.0 is championed by U.S. cable giant Comcast.
One other potential bright spot in CommScope’s otherwise gloomy report? BEAD.
The company said it expects to see money from the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program begin to flow in late 2024, with a “significant pickup” in 2025.
“When we think about a total available market for us, we’re calling it like about $4 billion and I’d say that’s over like a 4 to 5 year period,” Treadway concluded.