CommScope beats Q3 estimates as North American demand stays strong

Image: CommScope/Flickr

CommScope’s third-quarter earnings topped analysts’ estimates as demand from both wireless and wireline network operators in North America held strong.

The North Carolina-based infrastructure provider posted net income of $94 million, or 48 cents a share, up dramatically from the year-ago loss of $81 million, or 42 cents a share. Third-quarter earnings of 81 cents a share outpaced estimates of 72 cents a share.

CommScope shares rose more than 6 percent Thursday afternoon following the report, TheStreet noted.

“We are pleased to deliver year-over-year revenue growth and strong bottom-line results, which exceeded our expectations. Our fiber-to-the-X and wireless technologies were catalysts for this strong performance, especially in North America,” CEO Eddie Edwards said in a press release. “Service providers continue to densify their wireless networks and push fiber deeper into their high-speed broadband networks. With our broad product portfolio, we are well positioned to enable customers to transition their networks to respond to the ever-growing demand for bandwidth.”

CommScope said sales of its Mobility Solutions unit slid by 4 percent year over year, however, as higher spending by North American operators “was more than offset” by declines in other markets. But the evidence of a solid North American market should help assuage fears that the segment is softening as mobile operators have largely reined in their capex investments as they prepare for the emergence of 5G technologies.

“Persistent strength in North America (+10 percent growth in mobility and FTTX) and ongoing cost optimization initiatives drove slightly better-than-expected revenue and profitability above our expectations,” Barclays analysts wrote in a research note to investors. “While we are less optimistic about near-term demand prospects in select international markets (i.e. Middle East, Latin America), we believe the case for an improving structural demand cycle across its key wireless (i.e. new spectrum deployment, small cells) and fiber (i.e. densification) continues to remain in place.”