& cplSiteName &

Arris Pumps Up the Docsis 3.0 Volume

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
7/31/2009
50%
50%

Cable's Docsis 3.0 deployments are still in the early innings, but the majority of Arris Group Inc. (Nasdaq: ARRS)'s cable modem termination system (CMTS) shipment hits in the second quarter were of the wideband variety. "Greater than 60 percent" of those CMTS shipments had that distinct Docsis 3.0 flavor, Bruce McClelland, president of the vendor's Broadband Communications Systems unit, noted during Thursday afternoon's second-quarter earnings call. Overall, CMTS-related revenues hit an all-time high at Arris in the second quarter, as the company shipped out 32,005 CMTS downstreams, 30,852 upstreams, and 314 CMTS chassis. That compares favorably to rival Motorola Inc. (NYSE: MOT), which shipped 15,103 downstream ports, 13,052 upstreams, and 222 CMTS chassis in the same period. CMTS sales also contributed to non-GAAP gross margins of 42.2 percent, well ahead of last quarter's 37.8 percent. And revenues in the category could rise further. "The Docsis 3.0 cycle is just beginning," claimed Arris CEO and chairman Bob Stanzione. Although CMTS sales were off the charts, thanks in large part to Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s aggressive deployment strategy, the company came in shy of Wall Street's revenue expectations. Earnings, however, were a nickel better than analyst forecasts. (See Comcast: Wideband Build Is Nearly Half Done .) Table 1: Arris Q2

2Q08 2Q09 Change (%)
Revenues ($M) 281.1 278.5 -1%
EPS ($)* 0.15 0.27 80%
*Non-GAAP
Source: Arris


Table 2: Analyst Comparison
Analysts' Consensus Estimate 2Q09 Actual 2Q09
Revenues ($M) 281.00 278.50
EPS ($)* 0.22 0.27
*Non-GAAP
Source: Arris and Morgan Keegan


Although revenues were down year-on-year, Arris has boosted earnings without cutting expenses, Stanzione said, noting that R&D investment is up 5 percent versus last year. CPEs not keeping pace
However, the Docsis 3.0 story on the modem and embedded multimedia terminal adapter (EMTA, or integrated voice modem) wasn't as wonderful, as the vast majority of those product shipments remain of the Docsis 2.0 variety. That's something Broadcom Corp. (Nasdaq: BRCM), a leading Docsis chip maker, lamented late last week. (See Broadcom Anticipates Docsis 3.0 Push.) Overall, the consumer premises equipment (CPE) side of Arris's business was down 4 percent, as Arris shipped out 1.27 million Docsis devices, attributing the decline in part to the down economy. "EMTA sales are likely to continue to be challenged by wireless substitution and lower churn in the housing market," notes Jefferies & Company Inc. analyst George Notter. Earlier this week, Time Warner Cable Inc. (NYSE: TWC) confessed that "cord-cutting" is occurring in the voice service category. (See TWC Pinpoints Two WiMax Markets.) Stanzione said CPE remains a profitable business for Arris, and he expects growth to resume as the economy recovers and the product mix shifts to Docsis 3.0 and other "higher functionality" devices: "I see the Docsis 3.0 wave gaining momentum, with CPU volume picking up as the year goes on." Staying conservative
Those bright prospects caused analysts to wonder openly on the call why Arris offered up a cautious third-quarter revenue forecast of $260 million to $280 million, below Wall Street's expected $290 million. When pressed, Stanzione would only say that Arris is hesitant to provide aggressive guidance, "given the circumstance of the market." Arris, however, does expect EPS to be in the range of 22 cents to 26 cents in the third quarter, in line with the Street's forecast of 23 cents. Arris shares were down 42 cents (3.27%) to $12.44 each in early trading Friday. — Jeff Baumgartner, Site Editor, Cable Digital News

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
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
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom on what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
LRTV Custom TV
Nokia Introduces Virtual Service Router for More Rapid Service

4|6|17   |     |   (0) comments


James Cumming, product line manager for virtualized service routers at Nokia, demonstrates how the virtual router based off the Nokia ecosystem changes the network function experience.
LRTV Custom TV
The Keys to SD-WAN Success

4|6|17   |     |   (0) comments


Versa Networks CEO Kelly Ahuja talks about the key requirements for service provider-managed SD-WANs.
LRTV Custom TV
Intel & Cisco on Joint 5G Solutions

4|5|17   |     |   (0) comments


Dave Ward, SVP and CTO of Cisco, is joined by Sandra Rivera, corporate VP and general manager of network platforms group of Intel, on the revolutionary 5G technology that changes networking and computing fundamentally.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
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
Time for a Telecom Reboot
Steve Saunders, CEO and founder, Light Reading, 4/19/2017
Comcast Ready for Clash With Hulu
Mari Silbey, Senior Editor, Cable/Video, 4/18/2017
Unlicensed: It's What's Next for US Mobile Operators
Dan Jones, Mobile Editor, 4/19/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Verizon's Fiber Spend Won't End With Corning
Mari Silbey, Senior Editor, Cable/Video, 4/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
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 ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Animals with Phones
Now That's an Ad Campaign Click Here
Meerkats to the rescue!
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.