& cplSiteName &

Arris Rides Capex Wave in Q4

Alan Breznick
2/20/2014
50%
50%

Cisco's loss definitely appears to be Arris's gain.

Riding a wave of increased capital spending by its leading cable and telco customers, Arris Group Inc. (Nasdaq: ARRS) racked up higher than expected sales and earnings for the fourth quarter as its shipments of traditional set-top boxes, next-gen video gateways, and next-gen Converged Cable Access Platform (CCAP) devices all posted strong increases. The company reported nearly $1.2 billion in revenue and adjusted net income of $77.6 million, or 54 cents per share, for the quarter, beating Wall Street's consensus estimates and winning praise from analysts.

Customer premises equipment (CPE) led the way for Arris, particularly on the video side, generating $865.4 million in revenue. Unlike rival Cisco Systems Inc. (Nasdaq: CSCO), which has been slumping badly on the video side, Arris reported that cable set-top box shipments leapt 43% in the quarter as cable operators raced to deploy both low-end digital transport adapters (DTAs) and high-end home video gateways to compete against telcos, satellite TV providers, and over-the-top (OTT) video providers. (See Revenue, Income Slide In Cisco's Q2 2014.)

One standout set-top unit was the XG1, a new, hybrid IP video gateway that Arris is now supplying to Comcast Corp. (Nasdaq: CMCSA, CMCSK) for the MSO's rollout of its next-gen X1 platform. Arris said its deployments of the XG1, its first box to support the cable industry's Reference Design Kit (RDK) IP video software stack, got off to a promising start in the fall after earning product qualification.

"The Comcast XG1 came on very strong at the end of the quarter," noted Arris chairman and CEO Bob Stanziohe on the company's earnings call late Wednesday. "Certainly the XG1 played a nice factor in the quarter," agreed Larry Robinson, president of Arris's CPE division.

Another standout performer was the DVB-based set-top box that Arris introduced in Latin America during the fall quarter. With telcos initially showing healthy demand for the new IP-based set-tops, Stanzione said Arris views the market as another "strong opportunity."

On the access network side of the ledger, Arris reported growing demand for its integrated CCAP device, known as the E6000. The company said the E6000's deployment base doubled to cover cable systems with more than 2 million subscribers in the fourth quarter, as MSOs began installing the more powerful, high-density, space-savings CCAP devices in their cable headends.

Bruce McClelland, president of network and cloud and global services for Arris, said the E6000 accounted for more than half of the company's shipments of broadband infrastructure equipment in the quarter, outstripping its flagship C4 cable modem termination system (CMTS). He said Arris is seeing "strong interest around the world" in its CCAP product.

About the only downside in the earnings report for Arris was a quarterly sales decline in its traditional DOCSIS equipment business, which includes cable modems, data gateways, and CMTS devices. While the company officials declined to specify how much DOCSIS shipments and sales dropped from their record levels in the third quarter, they said they anticipate a strong rebound in the first quarter.

As usual, three of the biggest US MSOs and telcos generated a significant share of Arris's sales in the fourth quarter. Comcast led the way with $227.7 million in order, or 18.6% of Arris's total, followed by Verizon Communications Inc. (NYSE: VZ) with $150 million (12.5%) and Time Warner Cable Inc. (NYSE: TWC) with $82.6 million (6.9%).

On the earnings call, several analysts pressed Arris executives about the impact of Comcast's pending $45.2 billion deal to buy Time Warner Cable. The analysts wondered whether TWC might pull back or change its ambitious capital spending plan because of the deal. (See Comcast to Buy Time Warner Cable for $45.2B .)

But, shrugging off those concerns, Arris officials said they're seeing no evidence of any spending cuts or shifts by either TW Cable or Comcast, which are both planning to boost their capex this year. "So far we're seeing no change and we don't anticipate any change," Stanzione said. "We're going full steam ahead."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/28/2014 | 5:15:38 PM
Re: Everything's Looking Up for Arris
One other thing to consider: What does Arris do for an encore now? When you're sitting on top of the world, the only way to go is down, no? :) 
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/28/2014 | 5:04:47 PM
Re: Everything's Looking Up for Arris
One thing that was downfor Arris was DOCSIS device shipments, products like cable modems and E-MTAs. Don't know if this was a fluke or what yet. But that is an area to watgh.  
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/26/2014 | 9:44:44 PM
Everything's Looking Up for Arris
There seems to be barely a cloud in the sky for Arris these days. Almost every piece of its business is firimg ahead. Will be interesting to see if Cisco can get re-energized in the cable space quickly and halt Arris' market momentum.    
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
LIVE NOW!
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
UPCOMING COURSE SCHEDULE
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
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.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BT’s Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
LRTV Custom TV
BT's Openreach Has High Hopes for Long-Reach VDSL

11|11|16   |   06:04   |   (0) comments


Peter Bell, Network Portfolio CIO at BT's access business Openreach, talks about the operator's trial of a new broadband access technology called Long Reach VDSL.
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
AT&T Debuts DirecTV Now on New Video Platform
Mari Silbey, Senior Editor, Cable/Video, 11/28/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Samsung Bows to Investors, Considers Revamp
Iain Morris, News Editor, 11/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.