Casa CEO Guo Says Cable Biz Still in ‘Digestion Phase’ with Recent DOCSIS 3.1 Capacity Upgrades

Vendor continues to struggle, with revenue down 34% in Q3
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Cable broadband access vendor Casa Systems continued to struggle in the third quarter, reporting a 34% revenue slide to $81.8 million.

The revenue figure came in well below the $108 million projected by equity analysts covering the company.

Central to Casa’s recent troubles has been a slowdown in the cable access network business, which yields 52% of Casa’s sales. CEO Jerry Guo said cable operators are still in a “digestion phase” in regard to their investments in DOCSIS 3.1 over the last several years. Upgrades to virtualization and Distributed Access Architecture (DAA) are coming, but they haven’t arrived.

“We continue to believe that deployments of DAA, including virtual CCAP, are inevitable,” Guo told investment analysts. (A transcript of last week’s earnings call was provided by Seeking Alpha.) “But we expect that DAA rollouts in the near term will be very measured, even in spite of early announced wins in this space.

“Although we did see revenue during the quarter from new products for cable, including our BDM cards and Remote PHY nodes, cable revenue for the third quarter was overwhelmingly from integrated CCAP hardware and software capacity upgrades,” Guo added. “Trials of DAA are progressing well, but we are not yet seeing moves to a large-scale deployment of DAA products.

Guo told analysts he doesn’t expect a rebound to come soon.

“We believe this will continue through the end of this year and very likely extending to most of 2020,” he said. "While in this phase, MSO customers are primarily adding capacity to existing integrated CCAP chassis.”

With Casa’s executive team responding to only a few questions on last week’s call, analysts walked away scratching their heads.

"The outlook leaves us with little insight around the timing and magnitude of a potential recovery,” wrote Raymond James analyst Simon Leopold. “We presume wireless helps, but cable spending likely remains an uphill battle exasperated by operator adoption of virtualization."