Earnings Preview: CommScope

CommScope (CTV) is expected to report Q3 earnings after market close Thursday Oct 30, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is $1.04 for EPS and $1.10B for revenue, according to First Call.

Analyst Views

Avondale believes CommScope will report in-line Q3 results and indicate long-term fundamental drivers for bandwidth demand are firm. Avondale expects solid results in the wireless access products to be somewhat offset by weaker than anticipated enterprise sales as the tail end of Q3 may have clipped momentum. Additionally, the firm anticipates the decline in commodity prices to partially offset the stronger dollar in the quarter. Avondale anticipates Q3 revenue of $1.08B (down 3% on a consolidated basis). By segment, Avondale expects Enterprise revenue of $252.4M, up 4% from the previous quarter; Broadband revenue of $150M, down 8% sequentially, Antenna, Cable and Cabinet revenue of $498.4M, flat from Q2 and Wireless Network Solutions revenue of $185M, also flat from last quarter.

In terms of guidance, in Avondale's view, CommScope will reiterate its full year guidance, but present a cautious outlook in light of the lingering effects of a tight credit market. The firm would expect some indication of the company's debt reduction plan. Consensus for Q4 is 85c and $1.02B; and a FY08 consensus of $3.47 and $4.21B.

Key issues for the conference call: Color around the company's restructuring announcement on July 22, 2008, and outlook for realized synergies in 2008 coupled with expectations for 2009; investors/analysts will also have a keen interest in the company's view of carrier capital budgets in 2009, and challenges CommScope may face given a reduction in capital projects.