In short: Added another 5 bps at $10.35 after the stock fell from ~$12 to $10.30 on Q2. The good news landed: the Ruckus sale closed July 1 for $1.85B cash, a new $5/share special dividend was confirmed for August (after an earlier $10), total capital returned reaches $3.4B / ~$15 a share, and the balance sheet is now debt- and preferred-free with >$2.5B of book equity. The bad news was margin: net sales $319.6M (−1.4%) and a GAAP operating loss of $8.9M, with full-year Aurora EBITDA guidance cut $25M to $200-225M because memory-chip inflation stopped them shipping coaxial upgrade boxes; Russell-index removal added technical selling. "We're not going to make that one a big position because we're still worried about memory prices." Deck page 23.
Vistanc is what's left of CommScope after it sold most of itself off. The plan was always to hand the proceeds back: it already paid a $10 per share special dividend, and this quarter it confirmed another $5, funded by the $1.85 billion sale of its Ruckus unit that closed on July 1. Add it up and roughly $15 a share — $3.4 billion — has been returned, leaving a company with no debt, no preferred shares, and over $2.5 billion of book equity.
What remains is Aurora, the broadband equipment business — and that is where the quarter disappointed. Memory chips have become so expensive and scarce that Vistanc couldn't build enough of the boxes cable operators use to upgrade their coaxial networks, so it cut its full-year profit forecast by $25 million. Being dropped from the Russell indexes added more selling on top.
Singh added a small 5 basis points at $10.35, and is deliberately keeping it small: the special dividend is confirmed, but the memory-cost problem hitting the remaining business is the same problem hurting Apple, and he doesn't want size in it while that runs.
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In short: Expert-call update (Carlos Treves, VP product/growth at Zayo) that trimmed conviction: mapping all the asset sales gets ~32% upside on the stub / ~19.5% on the stock (half the cap is cash; ~45% on the business value alone), and it still trades ~3-4× EBITDA vs a 6-7× fair — but "we don't think there's a tremendous amount of upside because I found out there's quite a lot of customer concentration." Still cheap to fundamentals; awaiting government deal approval.
This was last week's featured special situation (the ex-CommScope shell that's mostly cash plus a growing broadband-equipment business, Aurora). This week Singh brought in an industry expert to pressure-test it, and the update lowered his enthusiasm. The math still shows real upside — roughly 19.5% on the stock, more on the stub once you strip out the cash and dividend, at only ~3-4× earnings versus a fair 6-7× — but the expert found the business leans on a small number of customers ("customer concentration"), so "not a tremendous amount of upside." Still cheap, but the deal also needs government approval. Hence the downgrade from a featured buy to a hold-and-watch.
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In short: The featured capital-arbitrage special situation (5bp tracker Monday → 20bp on a war flush below $12.50). The old CommScope sold its CCS unit to Amphenol for $10.5B, wiped out all debt, and paid a $10 return-of-capital special dividend (the sole reason the chart "crashed" from $20 to $12.38). Now selling Ruckus to Belden for $1.846B (13× EBITDA) → ~$1.7B cash = >60% of the $282M cap, teeing up a conservative ~$5 special dividend (Aug/Sep). That leaves the growing Aurora broadband core (DOCSIS 4.0 super-cycle; Comcast's key vendor; Q1 rev +32% / EBITDA +32%) at ~4× EBITDA vs peers Vincima 7×, Tellabs 8×, Harmonic 20× → $15 base to a ~$30 triple. Risk: the special dividend could be diverted to M&A, stranded costs, a $150M lender lawsuit (~$0.63/sh), rising DDR4 costs.
This is the old CommScope, and the reason the stock chart looks like a disaster ($20 down to $12) is actually good news: it sold its biggest division to Amphenol for $10.5 billion, used the money to pay off all its debt, and handed shareholders a $10-per-share cash dividend (tax-free, as a "return of capital"). Chop $10 off any stock and the chart cliff-dives — but nothing bad happened.
Now it's doing it again: it's selling a second business (Ruckus) to Belden for ~$1.8 billion, which after taxes brings in about $1.7 billion of cash — more than 60% of the company's entire $282M market value. Management has said it will pay most of that out as another special dividend of roughly $5 a share this fall. So you buy at $12.38 and get about half your money back in cash within months. And what's left over — Aurora, which sells the upgrade kits cable companies like Comcast need to keep up with fiber (the "DOCSIS 4.0" boom) — is a growing business the market is pricing at almost nothing (~4× earnings vs 7-20× for rivals). Singh starts a small position Monday and adds if war fear pushes it lower.
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