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DZS (DZSI) Closes Asia Business Divestiture for Core Focus

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DZS Inc. (DZSI - Free Report) has completed the divestiture of its Asia business to DASAN Networks, Inc., marking a pivotal step in its growth strategy. With the sale, DZS is poised to focus its resources on key regions, including the Americas, Europe, the Middle East and Africa (AEMEA), and Australia/New Zealand (ANZ). The move not only streamlines its operations but also eliminates approximately $43 million of debt, significantly reducing its long-term debt to $15 million.

The decision to divest aligns with DZS' long-term growth pillars, which include a focus on the fiber broadband investment cycle, growth opportunities in North America, Europe and the Middle East, as well as advancements in software-defined networking and 5G mobile transport adoption.

By narrowing its focus to the AEMEA and ANZ regions, DZS aims to capitalize on its market-leading technologies, such as the Velocity access edge optical line terminal portfolio and advanced AI-driven software solutions. These investments are well-aligned with the increasing demand for next-generation fiber networks, supported by significant government stimulus programs.

Moreover, the divestiture positions DZS to achieve higher blended margins, with a greater portion of its revenue coming from recurring licenses related to its software-centric solutions. As the industry shifts toward open, standards-based solutions, DZS is well-positioned to meet the evolving needs of communication service providers with its innovative products.

The successful completion of the Asia business divestiture underscores DZS' commitment to optimizing its portfolio and pursuing strategic growth opportunities. By focusing on high-growth regions and leveraging its technological expertise, DZS is poised to deliver long-term value to its customers and shareholders.

Founded in 1996 and based in Plano, TX, DZS offers network access solutions and communications platforms for service providers and enterprise networks across the globe. The company is likely to benefit from the secular trend of 5G deployment with healthy traction in the fiber LAN ecosystem. With better visibility and solid order trends, the company is aiming to gain cost efficiencies and introduce innovative products to the market.

The stock has lost 83.6% in the past year compared with the industry’s decline of 54%.

Zacks Investment Research
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Zacks Rank & Key Picks

DZS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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