From pay TV set-tops to the technology that goes into the DOCSIS-powered broadband networks of cable companies, CommScope has been long been one of the telecom business' more recognizable vendors.
But with its shares down once again Tuesday — more than 5% as of midday trading on the Nasdaq — the Hickory, N.C.-based company is challenged by more than $9 billion of debt and the very real potential of winding up in bankruptcy. Much of that debt is tied to CommScope's $7.4 billion purchase of Arris back in 2019.
After trading at over $9 a share a year ago, CommScope’s share price has dropped to below $1.80.
In early October, the company sold its “Home Networks” unit, which makes “customer premises equipment” like video set-tops and gateways, to Vantiva, the French company formerly known as Technicolor. And according to a recent Bloomberg report, CommScope is also looking to possibly sell its access networks business, which makes software and hardware for DOCSIS 4.0 networks, as well as its Ruckus outdoor wireless unit.
With CEO Chuck Treadway declaring, “The weaker macroeconomic backdrop and customer inventory digestion continues to negatively impact revenues” during CommScope's Q3 earnings report on October 30, the company lowered its EBITDA guidance.
Late last week, CommScope shares perked up after Raymond James analyst Simon Leopold upgraded its shares to “market perform” from ”underperform.“ (This was first reported on by Light Reading.)
Leopold believes the company's balance sheet will start to look better after its currently high inventory levels stabilize.
“We cannot rule out the risk of bankruptcy, but we believe the fundamentals have nearly bottomed and that the company can avert default,” Leopold wrote. “We consider CommScope a good company, yet it faces challenges.”
