CommScope pulls in Home Networks spin-off over supply chain issues

Feb. 25, 2022
Meanwhile in its Q4 and full year 2021 report, the company cited strong performance in its Outdoor Wireless Networks and Venue and Campus Networks units, as Q4 net sales in these areas increased 27% and 24% YoY, respectively.

CommScope (NASDAQ: COMM) on Feb. 17 reported results for its quarter and year ended December 31, 2021.

Foremost, the reporting recounted how in April 2021, in furtherance of the CommScope NEXT transformation plan, the company announced a plan to spin-off its Home Networks business. However, citing the "unfavorable performance" of the Home Networks business in the second half of 2021 -- which the company stated was driven primarily by supply chain shortages and delays -- CommScope said it is now postponing the separation plan.

The company said it "remains committed to a strategic separation of the Home Networks business from CommScope." However, the company admitted that it does not at this time have an estimate of when the separation of the Home Networks business will be completed.

Reorganized business structure

Also in the report, CommScope stated it will reorganize its business structure in 2022 "to align its portfolio of products and solutions more closely with the markets it serves and bring better performance clarity with its competitor peer set."

Pursuant to the new operating structure, CommScope expects to report its results in the five reportable segments, as listed below, beginning in the first quarter of 2022.

  • Connectivity and Cable Solutions - Combines most copper and fiber cabling and connectivity products.
  • Access Network Solutions - Includes active broadband cable and video technologies.
  • Networking, Intelligent Cellular and Security Solutions - Focused on providing wireless communications solutions for indoor and venue applications.
  • Outdoor Wireless Networks - Largely unchanged from the current Outdoor Wireless Networks segment.
  • Home Networks - Largely unchanged from the current Home Networks segment.

In partial disclaimer, CommScope noted that "work on reorganization of [its] new segments is still underway and the company has not yet finalized the exact segment composition."

Segment performance

In terms of year-over-year business segment performance, CommScope reported the following:

  • Broadband Networks:  Net sales of $782.4 million, increased by 0.5% from the prior year period driven by growth in its Network Cable and Connectivity units, partially offset by declines in its Access Technologies unit.
  • Outdoor Wireless Networks:  Net sales of $374.0 million, increased by 26.9% from the prior year period primarily driven by growth in the company's Macro Tower Solutions unit.
  • Venue and Campus Networks:  Net sales of $591.0 million, increased by 24.0% from the prior year period driven by growth in all product lines including its Indoor Copper Enterprise, Indoor Fiber Enterprise, RUCKUS Networks and DAS and Small Cell units.
  • Home Networks:  Net sales of $476.7 million, decreased 18.1% from the prior year period primarily driven by declines in Broadband Connectivity Devices.

For its full year results and comparison, the company concluded that its net sales in 2021 increased 1.8% year over year to $8.59 billion. It said its core net sales increased 11.8% year over year due to higher net sales in all three of its core segments.

ComnmScope's full year report clarified: "Management will continue to report the financial results of its “core” business separately from Home Networks. These supplementary core financial measures reflect the results of the Broadband Networks, Outdoor Wireless Networks and Venue and Campus Networks segments, in the aggregate. The core financial measures exclude the results and performance of the Home Networks segment. These metrics represent the business segments as CommScope has reported them. However, the ultimate definition of the Home Networks business that the company expects to separate from CommScope may vary, and future results may differ materially."

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