& cplSiteName &

Arris Starts Off Year Strong

Alan Breznick
5/7/2014
50%
50%

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
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.
NEXT COURSE
Wednesday, July 27, 1:00PM EDT
The Changing Face of the Data Center World
Rodney M. Elder, Senior Solutions Architect, Equinix
UPCOMING COURSE SCHEDULE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
in association with:
From The Founder
In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
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.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
LRTV Interviews
AT&T Launches Network Functions on Demand

7|17|16   |   05:26   |   (0) comments


Roman Pacewicz, Senior Vice President, Offer Management & Service Integration, AT&T Business Solutions, discusses the operator's launch of its Network Functions on Demand service.
LRTV Interviews
Enterprise Pitch for Ciscosson

7|14|16   |   04:43   |   (0) comments


After seven months of near silence, Cisco and Ericsson executives publicly discussed details on their extensive partnership. Among the tidbits shared by Martin Zander, VP, group strategy programs, Ericsson, and Doug Webster, VP service provider marketing, Cisco: The partnership was initially launched to serve the service provider market, but is already gaining ...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
September 27, 2016, Philadelphia, PA
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Kevin Lo's Move to Facebook: Sign of Things to Come?
Patrick Donegan, Chief Analyst, Heavy Reading, 7/20/2016
Verizon's Next With VNFs
Carol Wilson, Editor-at-large, 7/21/2016
Facebook Gets Its Drone On
Ray Le Maistre, Editor-in-chief, 7/22/2016
Ericsson Ejects CEO Vestberg
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.