It wasn't just a quarter to forget for Casa Systems, it was a quarter to bury deep in a hole somewhere.
Reeling from a New Year's Day hangover that lasted an agonizing three months, Casa reported that its revenues plunged nearly 60% in Q1 as sales of its cable, telco and wireless network access equipment and software all fell off the table. Total company revenues sank to $35.5 million in the winter quarter, down from $89.1 million a year earlier, causing the company to post its first quarterly loss in a decade.
"The first quarter was one of our toughest quarters," Casa President and CEO Jerry Guo noted on a solemn earnings call with analysts late Wednesday. "We are extremely disappointed with the results."
In a nutshell, everything went south for Casa in the first quarter. Its prime MSO customers cut back steeply on orders for Distributed Access Architecture (DAA), integrated Converged Cable Access Platform (CCAP) and virtual CCAP equipment and software while its newer lines of wireless and telco access products and services didn't take off as fast as anticipated.
"We believe the MSOs are cutting spending to the bone," Guo said, terming it "an industry-wide slowdown" following years of heavy spending by cable operators on DOCSIS 3.1, CCAP, DAA, Fiber Deep, digital video and other network upgrades. "It's hard to imagine that can continue much longer."
Taken aback by such an unexpectedly steep revenue decline, analysts questioned why Casa didn't issue a warning about its results before announcing them. "A miss of this magnitude warrants a pre-announcement," wrote Simon Leopold, an analyst with Raymond James & Associates, in a note to investors this morning.
Casa executives coountered that thy did indeed warn investors and analysts on their fourth quarter earnings call in March that the first half of the year would be slow, with the first quarter being the worst. But they admitted that the first quarter results limped in even lower than they anticipated.
Despite the Qi shortfall, Casa officials maintained that the company would still meet its prior revenue targets for the year, namely between $250 million and $300 million. Citing a bulging pipeline of field trials, RFPs and RFIs, especially in the cable and wireless sectors, they insisted that sales should pick up each quarter through the rest of the year, with the third and fourth quarters performing especially well.
In a provocative new BBWN webinar, Broadband Success Partners' Jack Burton will delve into cable's next-gen HFC architecture plans and explain why going all-fiber may make more sense for operators right now.
It wasn't long ago that TV was ranked by subscribers as the most important service in the bundle provided by their communications service provider (CSP). Recent research indicates that for nearly three quarters of subscribers, broadband is now the most important service. Broadcast TV is the most important service to only 15% of North American consumers, replaced by OTT video streaming platforms like Netflix, Amazon Prime and Disney+. In addition, many different competitors are moving aggressively to stake a claim in consumers' homes.
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In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.