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Why CommScope Holding Company, Inc. Tumbled on Thursday

What happened

Shares of CommScope (NASDAQ: COMM) fell as much as 16.5% on Thursday, but are down 12.9% at the time of this writing. The stock's decline follows the communication networks infrastructure company's second-quarter earnings report on Thursday morning.

So what

Both CommScope's revenue and adjusted earnings per share were lower than analysts were expecting. On average, analysts forecasted revenue and adjusted EPS for CommScope's second quarter of $1.22 billion and $0.65, respectively. CommScope reported second-quarter revenue and adjusted EPS of $1.17 billion and $0.60. These results compared to revenue and adjusted EPS of $1.32 billion and $0.74 in the year-ago quarter.

Image source: Getty Images.

"Our results for the second quarter reflect the continued impact of the challenging industry environment," said CommScope CEO Eddie Edwards. The CEO cited cautious spending among "certain North American service providers" amid industry consolidation, heightened competition, and the timing of some large projects as reasons for the challenging environment.

CommScope's guidance for its third-quarter revenue was also lower than analysts' consensus estimate for the period. Management guided for third-quarter revenue to be between $1.0 billion and $1.15 billion. Analysts were expecting third-quarter revenue of $1.29 billion.

Now what

As CommScope faces this challenging industry environment, Edwards said the company will "stringently manage" its costs.

Furthermore, Edwards gave a nod to its recent acquisition of Cable Exchange and its new high-speed migration platform, saying these moves will enhance CommScope's position in the data center market over the long haul.

"We expect to return to overall growth in 2018," Edwards said.

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Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.