Light Reading

Arris Starts Off Year Strong

Alan Breznick

A year after closing its big acquisition of Motorola Home, Arris is most definitely on a roll.

Picking up right where it left off at the end of last year, Arris Group Inc. (Nasdaq: ARRS) rang up higher than expected sales and earnings for the first quarter as its shipments of cable and IPTV set-top boxes, next-gen video gateways, wireless data gateways, next-gen Converged Cable Access Platform (CCAP) devices, and DOCSIS 3.0 cable modems all posted healthy increases. The Atlanta-based video and broadband equipment supplier reported nearly $1.23 billion in revenue and adjusted net income of $68.7 million, or 47 cents per diluted share, for the quarter, beating Wall Street's consensus estimates and earning continued showers of praise from analysts. (See Arris Rides Capex Wave in Q4.)

Arris also impressed analysts and investors by significantly raising its financial guidance for the second quarter, prompting its stock price to jump more than 10% in after-hours trading Tuesday following the release of its earnings report yesterday evening. With a record backlog of nearly $1 billion in product orders, the company now projects that it will produce revenues of $1.41 billion to $1.45 billion in Q2, well above the Wall Street consensus estimate of $1.21 billion.

"We're clearly off to a great start this year," Arris Chairman & CEO Bob Stanzione declared on the company's earnings call with analysts late Tuesday. "I believe 2014 is shaping up to be a very impressive year."

Riding a fresh wave of higher capital spending by its leading cable and telco customers and posting market-share gains against its competitors, Arris reported that its customer premises equipment (CPE) division enjoyed another very strong quarter, generating $893.6 million in revenue, up from $766 million in the year-ago period and $859 million in the fourth quarter. Unlike its biggest rival Cisco Systems Inc. (Nasdaq: CSCO), which has continued to slump on the video home equipment side, Arris reported that cable and IPTV set-top box shipments rose 11% on a year-over-year basis, primarily due to higher shipments of low-end digital transport adapters (DTAs) for cable operators.

But while DTAs accounted for most of the set-top box shipment gains, Arris reported that sales of the far more advanced video gateways also continued to climb in the winter quarter. For instance, Stanzione said the vendor continued to see healthy shipments of the XG1, a new, hybrid IP video gateway that Arris is now supplying to Comcast Corp. (Nasdaq: CMCSA, CMCSK) for the giant US MSO's rollout of its next-gen X1 platform.

On the broadband equipment side, Arris said unit volumes jumped 20% from the previous quarter as the company shipped more DOCSIS 3.0 modems, DOCSIS 3.0 wireless gateways, and advanced DSL gateways to its customers. In particular, Arris officials noted that they supplied the WiFi-enabled gateways for Time Warner Cable Inc. (NYSE: TWC)'s "TWC Maxx" system upgrades in New York and Los Angeles.

Turning to the access network side of the ledger, segment sales actually slipped to $331.6 million in Q1, down slightly from the results of the previous quarter and the year-ago period. But the numbers still came in better than expected as Arris reported steadily growing demand for its integrated CCAP device, known as the E6000. On the earnings call, Stanzione said the E6000's deployment base more than doubled to cover cable systems with over 5 million subscribers, as more MSOs installed the powerful, high-density, space-savings CCAP devices in their cable headends.

"We would have shipped more [E6000 devices] if not for supply constraints, which have now been addressed," Stanzione said. He estimated that Arris pushed back about $20 million to $30 million of E6000 product order to the second quarter due to the supply constraints and the heavier than expected demand.

The only real downside in the earnings report for Arris was that its international sales performance did not match its North American sales performance in the first quarter, leading to international contributing a smaller portion of revenues than in the fourth quarter. But Arris officials shrugged off this blemish, noting that international sales are already rebounding in the second quarter. "We see international bouncing back quickly in Q2 and going on from there," Stanzione said.

As usual, several of the biggest US MSOs and telcos generated a significant share of Arris' sales in the fourth quarter. But some of the names on that list of biggest customers changed.

Not surprisingly, Comcast led the way again with $203 million in order, or 16.5% of Arris' total, followed by Time Warner Cable with $159 million (13%). But then came two new entries -- Charter Communications Inc. with $137 million (11.2%) and AT&T Inc. (NYSE: T) with $134 million (11%). An old standby, Verizon Communications Inc. (NYSE: VZ), did not make the list of top customers due to its dwindling investment in FiOS network expansion.

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

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
From The Founder
Steve Saunders provides an overview of white box networking and introduces a new "slim line" version of the OSI 7-layer model.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
Centec on Ethernet Switching

11|26|15   |   09:58   |   (0) comments

Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
LRTV Custom TV
Delivering Service Agility in the Virtualization Era

11|25|15   |   5.41   |   (0) comments

Interview with Massimo Fatato, WW OSS Business Lead, Hewlett Packard Enterprise.
Wagner’s Ring
How Might Open Source Fail?

11|24|15   |     |   (10) comments

Open source, SDN, and NFV are looking inevitable – but performance, standards proliferation and regulatory capture could derail the movement.
LRTV Custom TV
NFV Lifecycle Orchestration – a Fresh Vision for Telco

11|23|15   |   6.40   |   (0) comments

Simon Osborne, CTO Comptel, and Heavy Reading's Caroline Chappell reveal the business impacts of new SDN and NFV, and what the term service orchestration actually means. Together they define Lifecycle Service Orchestration and how the virtualized future will look for telecoms operators.
Between the CEOs
Cisco's Virtual Role in Saudi

11|20|15   |   12:15   |   (2) comments

Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
LRTV Huawei Video Resource Center
Huawei Leads With Kubernetes for Cloud PaaS

11|19|15   |   08:26   |   (0) comments

Huawei is looking to Kubernetes as a key tool for building robust open source technologies for customers and partners, said Ying Xiong, chief architect of cloud platform at Huawei, in an interview with Light Reading West Coast Bureau Chief Mitch Wagner at the recent Kubecon conference.
Women in Comms Introduction Videos
WiC in London: The Highlight Reel

11|19|15   |   5:33   |   (1) comment

NetCracker's Mervat El Dabae headlines an inspiring morning in London with help from leading women from Vodafone, TalkTalk, Hyperoptics and Ciena.
LRTV Documentaries
Why Saudi's So Hot for New Tech

11|19|15   |   05:07   |   (0) comments

Light Reading's Steve Saunders reports from Saudi Arabia, a hyper-competitive market desperate to embrace the next generation of communications technologies and services.
LRTV Custom TV
Why Data Models Deliver More Value Than Information Models

11|19|15   |   5.08   |   (0) comments

Stefan Vallin argues that more automation is needed to manage end-to-end services and the hybrid networks they run on, and that data models are key to achieving this.
Telecom Innovators Video Showcase
SDN Management & Orchestration in the WAN

11|17|15   |   7.20   |   (0) comments

Carol Wilson and Packet Design CTO Cengiz Alaettinoglu discuss CSPs' SDN service delivery and assurance requirements. Learn about a modular approach to building automated control, orchestration and management functions for the WAN that are policy- and analytics-driven.
LRTV Custom TV
Flash Networks: Optimizing for Radio Spectral Efficiency

11|17|15   |   3:34   |   (0) comments

Today most optimization vendors only focus on optimizing voice or data. Ofer Gottfried, Flash Networks' CTO, shows how improving data throughput and maximizing spectral efficiency reduces capital and operating expenses while also providing a platform for user engagement.
LRTV Custom TV
Making Pay-TV User Experiences Millennial-Friendly

11|16|15   |   6:42   |   (0) comments

The unique challenge of reaching and engaging Millennials is driving pay-TV video experience transformation that can include higher quality UIs, viewing of multiple content streams at once and seamless transitions between handheld devices and the television.
Allot MobileTrends Report H2/2015 reveals how daily online behavior can be used to discover smarter ways to profile customers and propose valuable, real-time offers to them.
Hot Topics
Samsung to Sell Wireless Networking Unit?
Dan Jones, Mobile Editor, 11/23/2015
Samsung: No Sale of Wireless Unit
Dan Jones, Mobile Editor, 11/25/2015
How Might Open Source Fail?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/24/2015
Sprint to Get $1.2B From New Leasing Venture
Dan Jones, Mobile Editor, 11/23/2015
Networking Shines in HP's Gloomy Final Earnings
Mitch Wagner, West Coast Bureau Chief, Light Reading, 11/25/2015
Like Us on Facebook
Twitter Feed
December 15, 2015
Virtualizing Cable Services
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Centec CEO James Sun talks to Steve Saunders about Ethernet switching and the white box revolution.
Light Reading founder and CEO Steve Saunders talks with Zayan Sadek, Regional Manager at Cisco Systems, about the competitive communications services market and advance of virtualization in Saudi Arabia.
Cats with Phones
Can't Find the Phone on Thanksgiving? Click Here
Check under the cat! (hint: bottom right)
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and for copper plant evolution and the various deployment possibilities for FTTH/B.