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CommScope Gets Favorable Ruling in Dali Wireless Patent Case

Zacks Equity Research

CommScope Holding Company, Inc. COMM has finally secured a favorable decision from the Patent Trial and Appeal Board (PTAB) against Dali Wireless. The company’s investment to develop more efficient solutions in the field of digital distributed antenna systems goes back many years.

The PTAB learnt that all patent claims of U.S. Patent No. 9,531,473 stated by Dali Wireless in co-pending litigation are unpatentable. It ruled that each of claims 6-21 were invalid in light of the prior body of work submitted by CommScope.

Markedly, the PTAB’s decision follows a favorable ruling by the Northern District of Texas jury in June validating CommScope’s five patents relating to digital distributed antenna systems. Due to the jury’s finding that Dali deliberately infringed each of CommScope’s five patents, CommScope will file motions for greater damages and attorney fees.

Prevailing Business Scenario

This apart, the wireless and broadband network technology company is optimizing its excellent customer relationship and competitive position, paving the way for healthy mobility solutions business, as communication service providers continue to build their networks to increase capacity and coverage.

CommScope remains focused on sound technology, highly efficient supply chain and continuous improvement. This should make it a preferred partner for all telecommunications businesses, as the industry shifts to 5G. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the company is actively developing solutions designed to support wireline and wireless network convergence, which is crucial for the success of 5G technology.

CommScope has long-term earnings growth expectation of 16.3%. The stock has lost 36.8% against the industry’s growth of 19.9% in the year-to-date period. The company is dealing with lower-than-expected performance in the connectivity solutions business. Nevertheless, it is likely to benefit from favorable networking market dynamics and anticipates improving trends through 2019 and beyond, while creating shareholder value.

For the third quarter, CommScope expects revenues between $2.3 billion and $2.5 billion. Non-GAAP adjusted EBITDA of $310-$370 million is anticipated. It estimates loss per share of 81-85 cents, based on 194 million shares, and non-GAAP earnings per share of 37-47 cents, based on 232 million shares.

Zacks Rank & Stocks to Consider

CommScope currently has a Zacks Rank #5 (Strong Sell). A few better-ranked stocks in the broader industry are PCTEL, Inc. PCTI, Nokia Corp. NOK and Viasat, Inc. VSAT. While PCTEL currently sports a Zacks Rank #1 (Strong Buy), Nokia and Viasat carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PCTEL surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 146.4%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

Viasat surpassed earnings estimates in each of the trailing four quarters, the average surprise being 230.6%.

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