CommScope Lowers Guidance

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Communications equipment vendor CommScope reduced its fourth quarter revenue and cash flow guidance Tuesday, citing difficult business conditions.
The Hickory, N.C.-based company said that it now expects revenue to be between $860 million and $865 million, down sharply from the previous expectations of $875 million to $925 million. In addition, the company reduced its operating cash flow guidance for the quarter to between $90 million and $95 million, down from $80 million to $100 million previously.
CommScope shares were apparently unaffected, at least in early trading Tuesday - the shares were up 68 cents each (4.9%) to $14.70 per share at 10:09 a.m.
CommScope said that restructuring costs are expected to be about $13 million in the quarter. It also anticipated that non-cash impairment charges to goodwill and purchased intangible assets of $375 million to $425 million in the period, primarily in its Wireless Network Solutions segment. Total goodwill and purchased intangible assets were $2.2 billion as of Sept. 30.
The company said the charges are due to ongoing difficult market conditions and a higher estimated cost of capital due to turmoil in the financial markets.
CommScope said it will release fourth quarter and full year results on Feb. 26.
"Fourth quarter business conditions were difficult and we expect further softening in the first quarter of 2009," said CommScope chairman and CEO Frank Drendel in a statement. "A slow start is expected in 2009 as our customers analyze the impact of the current recession on their businesses. We are sharply reducing spending in response and have been implementing workforce reductions to manage costs and other aspects of our business."
Earlier this month, according to published reports, CommScope laid off less than 100 of its employees in Hickory.
"Despite global economic challenges, we firmly believe in the strength of our industry leading products and diversity of our business model. We also believe that the ongoing, fundamental demand for bandwidth will create long-term opportunities," Drendel continued. "We continue to expect to have a 2009 business plan that keeps us compliant with our credit facility financial covenants."

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