CommScope shares have declined some 15 percent so far in 2017 but Morgan Stanley gave the company a boost last week with an upgrade to “Overweight.”
Analysts are betting that CommScope will be a “wallet share gainer” as companies invest in more efficient networks. And CommScope is betting on changes in data centers to boost its sales performance, says its CFO.
“[W]e are continuing to see a shift from enterprise-owned data centers to multi-tenant and hyperscale data centers. While we have historically been stronger in the enterprise-owned market, we are actively developing new solutions to better support the specific needs of the new hyperscale and cloud data centers,” Chief Financial Officer Mark Olson said in a call with analysts after CommScope posting earnings earlier this month.
“The world’s increasing consumption of data combined with the trend of businesses and service providers outsourcing their data center facilities rather than owning and managing them has resulted in significant growth in multi-tenant data centers.”
CommScope hopes to capitalize on its cabling and support technology as clients increase demand for “higher capacity networks,” Olson explained.
“To meet these challenges, a data center’s optical infrastructure must be flexible, future ready and easy to manage,” he noted.
“We recently announced our new high-speed migration platform, which uses modular building blocks to support the growing speeds and densities that new applications and architectures demand. We have seen early market excitement about the new platform and we’ll continue to identify opportunities that innovate and meet the evolving demands of our industry. We expect to introduce additional new products for the data center market in the second half of this year.”
As part of its data center strategy, CommScope recently closed on its deal for Cable Exchange, which focuses on a variety of cabling for high-capacity data centers.
“This highly complementary acquisition deepens our capabilities in supporting the growing market for high-capacity, multi-tenant and hyperscale data centers operated by the world’s largest technology in retail companies,” Olson said.
“Together with Cable Exchange, we expect to enhance our service to the data center market. We are thrilled to welcome Cable Exchange to the CommScope family, we intend to operate it as a stand-alone business within the Connectivity Solutions segment.”
CommScope shares closed at $32.84 on Friday. Shares have range between $28.50 and $42.75 over the past year.
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https://finance.yahoo.com/news/edited-transcript-comm-earnings-conference-194846160.html
