April 26, 2012
Arris Group Inc. (Nasdaq: ARRS) had a better-than-expected start to 2012 as several MSO customers turned their attention from Docsis 3.0 network rollouts to customer premises equipment (CPE) upgrades. (See Comcast 'Completes' Docsis 3.0 Rollout.)
Arris said 60 percent of the 1.6 million CPE units it shipped in the first quarter were equipped for Docsis 3.0, a platform that supports IPv6 and uses channel bonding to produce speeds of more than 100 Mbit/s.
Arris attributed the D3 surge in part to demand for a new breed of Wi-Fi-capable gateways, which represented one-third of all CPE shipments in the quarter. (See Cable Giants Get Aggressive on IPv6.)
Those first-quarter statistics prompted President and CEO Bob Stanzione to note during Wednesday's earnings call that the vendor had "seen the corner turn" on MSO investments in Docsis 3.0 CPE. To emphasize that trend, Stanzione presented a letter from Comcast Corp. (Nasdaq: CMCSA, CMCSK), Arris's largest customer, that encourages cable modem subscribers to upgrade their modems so they can benefit from faster broadband speeds.
CMTS demand was also strong as Arris shipped a record 109,744 downstream ports in the quarter, better than the 95,000 expected by Jefferies & Company Inc. analyst James Kisner. Arris added that it has also begun to ship a new CMTS upstream card that doubles the density to 24 ports and fits into the company's flagship CMTS, the C4. (See Arris CMTS Packs On Upstream Muscle .)
Arris also said development of its first Converged Cable Access Platform (CCAP) product, the E-6000, which combines CMTS and edge QAM functions, is on track, expecting it to be ready for initial commercial trials later this year. Comcast, the likely first customer for it, has issued a CCAP request for proposal (RFP) and intends to start some small-scale deployments in the second half of 2012. (See Comcast Issues CCAP RFP .)
New Moxi middleware program
Arris did not reveal shipment details for the Moxi video gateways spawned from its US$20 million acquisition of Paul Allen's Digeo Inc., but acknowledged they were lower than expected despite some recent contract wins with Buckeye CableSystem and WideOpenWest Holdings LLC (WOW) .
Stanzione said Arris will try to generate growth for the Moxi business with a new program, in collaboration with "several large lead customers," that involves the integration of middleware from "major third-party providers" into the gateways. Arris didn't elaborate, but it suggests the integration of tru2way middleware stacks, which are used by several large U.S. MSOs, including Comcast, Time Warner Cable Inc. (NYSE: TWC), Bright House Networks , Cablevision Systems Corp. (NYSE: CVC), Cox Communications Inc. , and by Canada's Videotron Ltd. Arris, though, doesn't expect to see deployments from that effort until 2013.
Arris's first-quarter results and second-quarter forecast beat analyst expectations. The vendor posted a profit of 19 cents per share on revenues of $304.2 million, up 6.6 percent versus the year-ago quarter. Wall Street was expecting a profit of 16 cents on revenues of $296.7 million.
Arris also projected second-quarter revenues of $330 million to $350 million and earnings in the range of 20 cents to 24 cents, better than analyst expectations of $313.5 million and 20 cents.
— Jeff Baumgartner, Site Editor, Light Reading Cable
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