Light Reading
11:00 AM The $2.35B deal for Motorola's Home business would remove Arris from the shadows of Cisco and cement Bob Stanzione's legacy

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
Educational Resources
sponsor supplied content
Educational Resources Archive
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?
Flash Poll
LRTV Custom TV
VeEX – Live from the Show

8|21|14   |   5:58   |   (0) comments


An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
LRTV Custom TV
Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

8|19|14   |   5:19   |   (0) comments


Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
LRTV Custom TV
NFV Myths: Is NFV Still Several Years Away?

8|11|14   |   1:13   |   (0) comments


Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Light Reedy
Numbers Are In: LR's 2014 Salary Survey

7|24|14   |   1:25   |   (7) comments


Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
LRTV Custom TV
Driving the Network Transformation

7|23|14   |   4:29   |   (0) comments


Intel's Sandra Rivera discusses network transformation and how Intel technologies, programs, and standards body efforts have helped the industry migration to SDN and NFV.
LRTV Custom TV
Distributed NFV-Based Business Services by RAD

7|18|14   |   5:38   |   (0) comments


With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
LRTV Custom TV
MRV Accelerating Packet Optical Convergence

7|15|14   |   6:06   |   (0) comments


Giving you network insight to make your network smarter.
LRTV Custom TV
NFV-Enabled Ethernet for Generating New Revenues

7|15|14   |   5:49   |   (0) comments


Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
LRTV Custom TV
Symkloud NVF-Ready Video Transcoding, Big Data

7|9|14   |   3:41   |   (0) comments


Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Today's Cartoon
Hot Topics
Level 3 Does Big Data Differently
Carol Wilson, Editor-at-large, 8/21/2014
IoT Alert: Samsung Snaps Up SmartThings
Mari Silbey, Independent Technology Editor, 8/15/2014
Comcast Streams Back to School
Mari Silbey, Independent Technology Editor, 8/21/2014
Line-Powered Phone Lines: A Hot Topic Again
Carol Wilson, Editor-at-large, 8/20/2014
Analyst: Ericsson, Oracle Top Shrinking SDP World
Carol Wilson, Editor-at-large, 8/19/2014
Like Us on Facebook
Twitter Feed