CommScope profits as a premium cable service.

• Author: Williams, C.C.

One place you won't hear a lot of complaints about how much television Americans watch is Hickory-based CommScope Inc. (CTV-NYSE). It's the world's largest maker of copper coaxial cable used by cable-television operators. It controls about 60% of the domestic market and has built a half-billion-dollar business, largely by helping feed the country's appetite for shows like WWF Wrestling, WCW Monday Nitro Live! and WCW Thunder.

Its stock has climbed swiftly and steadily since September 1998, when a major investor, New York-based Fortsmann Little & Co., sold its stake, cutting CommScope's stock price in half. Boosted by strong cable-equipment demand, solid quarterly performance and news of a $3 billion cable TV upgrade plan by New York-based AT&T Corp. - new owner of cable giant TeleCommunications Inc. - CommScope's shares reached a 52-week high of $36.25 in late July. That's more than double its early-January price and nearly 50 times 1998 operating earnings of 73 cents, The industry average is 23.3 times.

Can it keep up that pace? Maybe not, but CommScope's price hasn't peaked yet, says Barbara Puklin of Arnhold & S. Bleichroeder Inc. in New York. She expects it to hit $43 by the end of 2000. "The demand for its products is based on maintenance spending. They can continue to grow 20% a year for the next two to three years."

Cable operators, phone companies and wireless communication companies are racing to develop high-capacity two-way communication networks that can carry video, data and voice signals. In many cable networks, high-capacity fiber-optic cables carry television signals as light bursts along glass strands from the main office to transfer stations, where they are converted to electricity and sent to customers through cheaper, low-capacity coaxial cables. Companies are replacing those one-way coaxial cables with two-way cables. "[CommScope] is in the right sector of the market right now," says analyst Ramkrishna P. Kasargod, of Morgan Keegan & Co. Inc.

Analyst George Hunt of Wachovia Securities estimates that the cable industry will spend $8 billion this year and up to $18.5 billion by the year 2005 to upgrade. AT&T's three-year, $3 billion modernization of TCI could mean as...