CommScope Holding Company, Inc. (NASDAQ: COMM) announced that the company will transition to a new operating model and segment reporting structure, effective January 1, 2020, that is expected to help better capture the strategic value resulting from its acquisition of ARRIS and Ruckus Networks.
To that end, CommScope announced that it will operate and report its financial performance in four segments— for Venue and Campus Networks; Broadband Networks; Outdoor Wireless Networks; and Home Networks— aligned to the primary growth opportunities for each, related to the company's larger goal of shaping the most advanced networks of the future.
“Since completing the ARRIS acquisition in April, we have created a powerful company with what we believe is the most compelling and diversified global portfolio of industry leading technologies for enterprise and service provider customers,” commented CommScope's President and Chief Executive Officer, Eddie Edwards. “We expect our new operating model will enable us to realize significant benefits of cost and revenue synergies, strengthen our technology leadership, and support our long-term growth strategy. By bringing similar technology and product platforms together, we will accelerate end-to-end networking systems development, be able to shape the most advanced networks of the future and help our customers unlock the full potential of the coming 5G revolution."
Additional details on the four new business segments per as CommScope statement are as follows:
Venue and Campus Networks - "Targeting both public and private networks for campuses, venues, data centers, and buildings, this segment will combine the current Ruckus Networks, Enterprise and Distributed Coverage and Capacity (DCCS) businesses. It includes Wi-Fi and switching, distributed antenna systems (DAS), licensed and unlicensed small cells, and enterprise fiber and copper infrastructure. With year-to-date pro forma net sales of approximately $1.6 billion through September 30, 2019, this segment has several product lines that are expected to grow rapidly, and can provide a completely differentiated, integrated offering. The Venue and Campus Networks segment will be led by Ben Cardwell. Mr. Cardwell has been with CommScope for more than 15 years and has served in a variety of senior sales and segment leadership roles, most recently as senior vice president and segment leader for the CommScope Mobility Solutions and Connectivity Solutions segments."
Broadband Networks - "This segment, with year-to-date pro forma net sales of approximately $2.1 billion through September 30, 2019, will position CommScope as the leading North American equipment manufacturer with an end-to-end product portfolio serving the telco and cable provider broadband market. The new segment combines the existing Network Cable and Connectivity business with the Network & Cloud business. This segment will drive growth in CCAP, PON, Video Systems, Access Technologies, Fiber and Coaxial Cable, Fiber and Copper Connectivity and hardened closures. The Broadband Networks segment will be led by Kevin Keefe, an industry veteran with more than 25 years of experience. Mr. Keefe joined CommScope through its acquisition of ARRIS, where he served in a variety of business leadership roles, most recently as senior vice president and segment leader for the CommScope Network & Cloud segment."
Outdoor Wireless Networks - "Consisting of the company’s RF Products and Integrated Solutions groups, this segment, representing year-to-date pro forma net sales of approximately $1.2 billion through September 30, 2019, will focus on the Macro and Metro Cell businesses. It will consist of Base Station Antennas (BSA), RF Filters, Tower Connectivity, Microwave Antennas, Metro Cell and cabinets/steel, accessories, SAS and Comsearch. As the company’s wireless operator customers shift a portion of their 5G capital expenditures from the macro tower to the metro cell, CommScope’s differentiated offerings and portfolio can support a smooth and cost-effective transition for customers. The Outdoor Wireless Networks segment will be led by Farid Firouzbakht. Mr. Firouzbakht has been with CommScope for more than 15 years and has served in a variety of business leadership roles in the wireless space, most recently as senior vice president and leader of the RF Products business unit within the CommScope Mobility Solutions segment."
Home Networks - "Comprising the current Consumer Premises Equipment (CPE) business, this segment, which represents year-to-date pro forma net sales of approximately $2.6 billion through September 30, 2019, will focus on the future of the connected home and devices inside the home. Anchored by CommScope’s broadband gateways (coaxial, fiber, and wireless), video set-tops, and in-home devices, this business will continue to provide the industry-leading technologies for providing broadband services to and inside the home. The Home Networks segment will be led by Joe Chow. Mr. Chow joined CommScope in August 2019 and has served in variety of business leadership roles in the CPE industry for nearly 20 years, most recently as senior vice president and segment leader for the CommScope CPE segment."
CommScope says it expects the business realignment to help the company take advantage of greater revenue and cost synergy potential within its current business, further improving market leadership positions, as it further accelerates an integrated technology roadmap and positions the company to respond more quickly to new market opportunities.
CommScope says the move will also allow the company to create a unified supply chain organization to optimize its global manufacturing and distribution footprint and better position it to respond quickly to rapidly changing market conditions.
The realignment will also position the company to take advantage of its leadership position in fast growing, strategic markets, such as: hyperscale, multi-tenant and cloud data centers; macro and metro layer cellular networks; in-home networks and entertainment; venue and campus licensed and unlicensed public and private networks; and professional services.
“This new structure reinforces our goal to solve our customers’ problems faster, with a higher level of efficiency and innovation," added CommScope's Edwards. "With this portfolio realignment and more efficient operations, CommScope will accelerate its mission to push the boundaries of technology and deliver on our commitments to deliver growth, substantial cash flow, higher profit margins, and a scalable operating model. Our new structure seeks to provide all stakeholders with a greater level of transparency into the drivers of performance in the business, to drive better resource allocation decisions and strategic alignment.”