Arris Blows Out Docsis Modem Sales in Q3
The surge marked a 34 percent increase in Docsis CPE shipments over the previous quarter, when 83 percent of those 2 million units were outfitted with Docsis 3.0's channel bonding capabilities. (See Docsis 3.0 Dominates Arris Modem Shipments .)
The downside to that trend is that it caused gross margins to drop to 31.4 percent in the quarter, off from the 32.4 percent expected by Jefferies & Co. Inc. analyst James M. Kisner. Arris hopes to fix that in the fourth quarter as it anticipates a more balanced mix of Docsis CPE and higher-margin cable modem termination system (CMTS) sales.
Arris also tossed in an update on the E6000, a converged services edge device that initially will function as a super-sized CMTS before the vendor later adds capabilities that will turn the E6000 into a fully fledged Converged Cable Access Platform (CCAP) that combines CMTS and edge QAM functions. (See Arris Unleashes a Monster CMTS and Arris E6000 Sets Stage for CCAP.)
"We're well along in trials with multiple lead customers and we expect several deployments to go live late this quarter," Arris Chairman, President and CEO Bob Stanzione said on the Wednesday earnings call. He expects "full commercial sales" of the E6000 to start in 2013, noting that Arris has already received some early orders.
He didn't identify who's buying, but did note that Arris's approach with the E6000 was done in "close collaboration" with several MSOs, including Time Warner Cable Inc. (NYSE: TWC), Liberty Global Inc. (Nasdaq: LBTY) and Comcast Corp. (Nasdaq: CMCSA, CMCSK), the vendor's largest customer.
However, Arris does not expect to see any revenue from the E6000 in the fourth quarter of 2012. The vendor expects that to start happening in the second quarter of 2013, with a "chance we could recognize [revenues] in the first quarter," said Bruce McClelland, president of Arris's Broadband Communications Systems unit. He said the exact timing will be dependent on how quickly Arris can get the E6000 successfully through qualification testing.
Arris earned 22 cents per share in the quarter on revenues of $357.5 million, up 2.3 percent on the year-ago quarter -- in line with Wall Street expectations. The rise in revenues was driven by the record CPE shipments, along with new sales coming way of Arris's recent acquisition of BigBand Networks Inc. (See Arris Snaps Up BigBand .)
Arris expects fourth-quarter sales to be in the range of $345 million to $365 million, with GAAP earnings of 13 cents to 17 cents per share -- matching the guidance Wall Street was expecting.
— Jeff Baumgartner, Site Editor, Light Reading Cable