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Arris: CCAP Revenues Start to Trickle In

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
2/7/2013
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Arris Group Inc. said the first revenues tied to its next-generation cable access platform, the E6000, should start to creep in during the current quarter. But sales won't be a barn-burner right away. "We now have live traffic running on the E6000 and we expect to score our first revenues this quarter," Arris Chairman and CEO Bob Stanzione said on Wednesday's fourth quarter earnings call. He said field trials of the E6000 are expanding and that Arris has begun to ramp-up production. But don't expect the E6000 to be a big contributor just yet. An analyst asked if he could expect the product to bring in less than $5 million in the current quarter. Stanzione wouldn't give a number, but said revenues would be "pretty modest." Arris also didn't identify who will be responsible for those first-ever E6000 revenues, but Comcast Corp. and Time Warner Cable Inc. have both championed the new architecture and are Arris's two biggest customers. The E6000 is starting out as a super-dense cable modem termination system (CMTS), but Arris will evolve it into a full-fledged Converged Cable Access Platform (CCAP), which will integrate both the CMTS and edge QAM functions and help cable operators support all services on a unified space- and power-saving platform. (See Arris Unleashes a Monster CMTS.) Cisco Systems Inc., Casa Systems Inc., Harmonic Inc. and CommScope Inc. will also be chasing after a CCAP market that's expected to be worth more than $1 billion. Motorola Mobility LLC is pushing a CCAP strategy as well, but the fate of it likely won't be known until after Arris completes the acquisition of Motorola's Home business. (See Sizing Up the CCAP Players.) Motorola update
Speaking of that deal, Stanzione said Arris still expects to close it in the second quarter, noting that Arris has received the debt ratings it wanted and that "the financing commitments are nearly finalized." Integration teams are drawing up the transition plans. He also downplayed the suggestion that Comcast's recent decision to buy a 7.85 percent stake in Arris will give it a built-in advantage over other vendors. "I don't think [the investment] is going to sway their purchasing decisions one bit," Stanzione said. "They have a multi-supplier policy and I think they will stick to it." (See Comcast to Plow $150M Into Arris.) He acknowledged that Comcast's investment served as an endorsement for the deal. As for other motivations, "they [Comcast] were interested in the Motorola Home business winding up in a good place," the Arris CEO added. Financial snapshot
Arris earned $0.28 per share on revenues of $344 million in the fourth quarter. The profit met Wall Street expectations, but revenues were short of the anticipated $354 million. Arris expects first quarter revenues of $350 million to $370 million, above the $338 million anticipated by analysts. Downstream CMTS shipments rose to 105,246 ports in the third quarter, while modems and other consumer premises equipment (CPE) dipped to 2.26 million units, off 14 percent from the previous quarter. About 87 percent of the CPE shipped in the period had that distinct Docsis 3.0 flavor.

— Jeff Baumgartner, Site Editor, Light Reading Cable



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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
2/8/2013 | 10:58:23 AM
re: Arris: CCAP Revenues Start to Trickle In
Well, it's a start. If revenues for this product are indeed less than $5M, then it's probably hard for investors to get too excited about it yet, but it does at least mark an important milestone.- It appears that rollouts for CCAP-based gear should accelerate a bit in the second half of the year, with 2014 viewed as CCAP's first significant rollout year. JB-
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