& cplSiteName &

Arris Swings for the Fences

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
12/20/2012
50%
50%

11:00 AM -- I was not surprised that Arris Group Inc. emerged as the top bidder for Motorola Home, but I was shocked to learn that it put up $2.35 billion in cash and stock -- near the top of the $1.5 billion-to-$2.5 billion range that Google was expected to fetch for the maker of set-tops, video software and access gear.

After all, this is the same Arris that took its toys and went home when Ericsson AB upped the ante for Tandberg Television. This is the same Arris that paid $60 million for a cable modem termination system (CMTS) startup called Cadant Inc. in 2002, when, just two years earlier, ADC set the market by acquiring a similar startup, Broadband Access Systems, in a stock deal valued at a nutty $2.25 billion at the time. Arris nabbed video processing startup EGT Inc. for a song in 2009. It timed its purchase of BigBand Networks Inc. when the switched digital video (SDV) specialist was scuffling.

So, there's ample evidence that paying top dollar is not the Arris way. It's been known as a careful but shrewd deal-maker, content on taking walks, hitting singles and scoring the occasional double. This week it grabbed Wonderboy off the rack and took a glorious swing for the bleachers.

Arris Chairman and CEO Bob Stanzione didn't let this once-in-a-career, future-altering opportunity pass him by. He unblinkingly went all out to a strike a deal that's not only poised to remove Arris from the long shadows of Cisco Systems Inc. and give it a legitimate shot at becoming a global broadband and video powerhouse, but also to cement Stanzione's legacy.

But we don't know yet how that legacy will play out. The challenges ahead are not anywhere near as small as the deal is large for Arris.

Arris has acquired plenty of companies over the years, but nothing like this. It's now tasked with swallowing one that's more than twice its size, while also taking on nearly $2 billion in loans.

And, despite the talk about "synergies" between the two companies, there are some significant product overlaps that Arris will have to sort through. On Wednesday night's call, Stanzione stressed that Arris doesn't plan to exit any businesses. But it would seem likely that Arris will have to think about selling off the redundant pieces or pitching them altogether. It simply can't swallow Motorola Home whole.

There's going to be an unavoidable shakeout that will involve both people and products. That planning process, Stanzione said, gets under way this morning.

And, if Arris can execute the integration properly, there are good things that could come of the deal. Arris, for example, thinks it can achieve $100 million to $125 million in annual cost synergies.

And it could address one of Arris's historic shortcomings -- its reliance on Comcast Corp. and Time Warner Cable Inc., which accounted for about 50 percent of sales in the most recent quarter. If just one of them sneezes, Arris catches pneumonia, as the saying goes.

That vulnerability shrinks significantly with Motorola Home. Comcast and TW Cable are also the two largest customers of Motorola Home. But, together, Arris and Motorola Home will enjoy a much more diverse customer base that includes a better mix of cable operators and telco customers, with their top five combined customers representing 51 percent of revenues.

Like any acquisition, this one comes with the potential for risks and rewards, amplified by the relative size of Arris's latest prize. Stanzione and Co. did what it took to get the deal. Ahead comes the hard part -- making it work.

For more



— Jeff Baumgartner, Site Editor, Light Reading Cable

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
More Blogs from The Bauminator
Don't expect anything more to pop for a while, but one analyst sees John Malone & Co. as the 'logical, ultimate acquirer of Ziggo' if the price is right
Cable operators will need to free up at least 24MHz of spectrum for Docsis 3.1. But why is that the magic number?
Liberty Media's rumored plan to snag a 25% stake in Charter for $2.5B could aid the MSO's M&A strategy
Top US cable operators lost 1.41 million video subs in 2012, but the bleeding continues to show signs of slowing in a saturated pay-TV market
Aereo streams its 'no cable required' tagline into the video world. Will consumers tune in to the message?
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment


Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments


Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Netflix's Lesson in Culture Expectation Settings
Sarah Thomas, Director, Women in Comms, 6/21/2017
Kalanick Steps Down as Uber CEO
Sarah Thomas, Director, Women in Comms, 6/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.