Bruce McClelland, who led Arris’ purchase of Brocade’s Ruckus Wireless and ICX Switch business, has left CommScope where he had served as COO following its purchase of Arris earlier this year.
CommScope CEO and President Eddie Edwards explained that the move came as the company eliminated the COO position. During the company’s quarterly conference call with investors today, Edwards said the COO responsibilities would be spread throughout CommScope’s executive team and that Edwards himself will take a more active day-to-day role in the company’s operations.
“This decision to flatten our leadership structure expands accountability, which we have been striving to do in virtually every part of our company as part of our transformation,” Edwards said in prepared remarks. “I am deeply committed to CommScope’s continued growth and success, and with the board's full support I am taking a more active role in day-to-day activities to lead our company through these troubling times.”
McClelland had been at Arris for 14 years, serving in various management roles before taking on the CEO position in mid-2016.
Arris purchased Brocade’s Ruckus Wireless and ICX Switch business for $800 million in early 2017. That deal was part of Broadcom’s $5.9 billion acquisition of Brocade. Broadcom at that time said it would divest those Brocade assets because they competed with some of its largest customers, like Cisco. Those assets included Brocade’s range of access points (APs), controllers, and campus switching products along with the associated enterprise and service provider customer bases.
CommScope scooped up Arris earlier this year for $7.4 billion. That deal included CommScope taking a $1 billion equity investment from The Carlyle Group to help finance the acquisition.
CommScope’s operations are focused on provider service providers, hyperscalers, and enterprises with hardware and software connectivity platforms. These include virtualized baseband radio assets to support distributed network deployments.
One of CommScope’s bigger rivals on the hardware side was German-based Kathrein, which was acquired earlier this year by Ericsson.
Troubling TimesThose “troubling times” Edwards mentioned included its most recent quarter that saw a slowdown in CommScope’s business. The company’s overall net sales did double year over year, though all of that growth was based on the Arris acquisition as taking out those numbers showed a 12% year-over-year decline in CommScope-only sales.
Edwards blamed the shortfall on slower spending by some of the company’s larger cable customers that was also impacted by M&A activity in Europe. Edwards sounded a defiant tone in his remarks, stating that the company was continuing to streamline operations to help fight the “market headwinds.”
More telling was the significant drop in overall net income, which plunged from a gain of $65.9 million during the second quarter of 2018, to a loss of $350 million this year.
Most of those numbers did come in as expected, and investors appeared relieved by the results as CommScope’s stock price was trading up more than 5% at one point this morning. However, that price surge was just a slight bounce as it had hit a new 52-week low just yesterday.
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