CommScope doesn't need to be coaxed into making cable. Through three key customer segments, the company makes coaxial, fiber-optic, and other cable products for data, voice, and video transmission including high-bandwidth cable that provides telephone, cable TV, and Internet access. Segments include Broadband and Wireless; in addition, its Enterprise operations make network infrastructure products including cabinets, antennas, software, and network design services. Customers include telecommunications service providers and OEMs, including Anixter, Alcatel-Lucent, and Comcast. Private equity powerhouse The Carlyle Group took CommScope private in 2011 for $3.9 billion. It went public again in 2013.
Change in Company Type
Facing intense competition from companies in China, India, and other developing countries, in 2011 CommScope shopped itself to interested parties that would finance the company's turnaround. A takeover by The Carlyle Group, one of the world's largest private investment firms, gave CommScope deeper pockets and better positioned it to weather periods of reduced infrastructure spending on communications networks. As part of the acquisition, CommScope went private and simultaneously spurred a private placement of senior notes to raise $1.5 billion. The proceeds were used to pay expenses related to the deal with the Carlyle Group.
The Carlyle grooming proved successful. In late 2013 CommScope again went public. It plans to use its $576 million in proceeds to pay down debt and for general corporate purposes.
CommScope's Wireless division (RF networks and small cell distributed antenna systems primarily under the Andrew brand) contributes more than 60% of total sales. Enterprise, which includes SYSTIMAX and Uniprise branded fiber, cables, software, hardware, sensors, lighting, and control systems for data centers and commercial buildings, accounts for nearly 25%. The Broadband division's multichannel video, voice, and high-speed data coaxial and fiber optic cable operations bring in the final 15% of sales.
The company's products are sold in more than 100 countries. It has production facilities in the Australia, Brazil, China, Czech Republic, Germany, India, Ireland, Mexico, the UK, and the US (North Carolina, Illinois, Nevada, and Texas).
Its Wireless division has been expanding its Suzhou, China, manufacturing and distribution center to serve local customers. The wireless telecommunications market is growing in this region and the company's Andrew brand is the only non-Chinese cable and antenna supplier that is approved by state-run China Telecom. To meet demand, Andrew has been continually expanding its manufacturing operations in all its China locations.
While the company has seen slight improvements in sales over the past few years, mostly in the Wireless segment, operating income has remained strong as CommScope has restructured, written down and amortized assets, and covered acquisition costs.
Mergers and Acquisitions
In 2013 CommScope purchased Redwood Systems, a producer of lighting and sensor networks for data centers and other buildings. The company's platform can be deployed through CommScope's existing cabling infrastructure to integrate IT and building systems. In the same vein, it also picked up the assets of data center infrastructure management company iTRACS.
The company's Wireless division acquired Australia-based antenna company Argus Technologies in 2011. Along with its antenna offerings, Argus brought strong research and development capabilities, and it gave CommScope a greater global market presence through its offices in China, the UK, and the US.
Leading up to the acquisition, the company faced industry competition, recognizing that it had a limited number of core customers, distributors, and suppliers. The company put itself at risk by relying on contract electronics manufacturers to make its products. These factors, compounded by the global recession and credit crisis, caused CommScope to spiral downward. The company responded by consolidating and reorganizing its operations in an effort to trim costs and regain its financial footing.