Arris Expects a Rosy 2012

While some vendors are bemoaning a slowdown in carrier spending, cable supplier Arris Group Inc. (Nasdaq: ARRS) sees some good times ahead in 2012, led by its Docsis 3.0 gear and its video gateway products.

Arris stopped short of providing any specific dollar guidance for 2012, but the company does anticipate top line growth of 10 percent or more and an EBIDTA increase in the high teens. It ended 2012 with $1.09 billion in revenues, by the way.

"We'll give guidance one quarter at a time; however, I do believe those goals are achievable this year," Arris Chairman and CEO Bob Stanzione said Wednesday on the company's earnings call. Arris, he added, may be able to exceed those goals thanks to the recent acquisition of BigBand Networks Inc. (See Arris Snaps Up BigBand .)

While wireless is offering other vendors a path to solid growth in 2012, Arris will largely stick to its knitting to get where it wants to go. Some expected "strong" areas include Arris's Moxi gateway platform (acquired from Digeo Inc.) and its Docsis portfolio. (See Arris Starts to Make Hay on Digeo Deal and Wireless Capex to Grow 13% in 2012.)

Despite slower sales of the Moxi gateway in the fourth quarter, Arris still thinks it can turn the product into a into a $100 million business in 2012. Stanzione identified WideOpenWest Holdings LLC (WOW) , a competitive overbuilder with 1.6 million homes passed, as the latest customer for the device, joining Shaw Communications Inc. , BendBroadband and Buckeye CableSystem . He said Arris has two more Moxi deals about to pop.

Arris is also coming off a quarter where cable modem termination system (CMTS) port shipments reached a record of 99,968 to go along with 40,940 upstream ports. It also shipped 1.2 million Docsis CPEs, with 46 percent of them of the Docsis 3.0 variety.

But Arris will shift things around a bit so it can concentrate on the hot areas. One example: it will redeploy some resources at its Media and Communications Systems (MCS) unit, which houses the company's OSS, video-on-demand and ad-insertion products. Stanzione didn't say how many MCS employees will be moved around, but stressed that Arris is "not abandoning MCS by any means. ... It's not growing at the rate we thought it was going to grow two or three years ago."

Financial update
Arris earned 21 cents per share in the fourth quarter on sales of $281 million, up 2 percent year-over-year. It beat Wall Street expectations of 19 cents per share, but missed on anticipated sales of $288 million.

Sales to Comcast Corp. (Nasdaq: CMCSA, CMCSK) were $66.5 million, down from $83.2 million a year ago, while sales to Time Warner Cable Inc. (NYSE: TWC) rose to $57.8 million, from $45.4 million.

Looking ahead, Arris expects first-quarter revenues of $285 million to $305 million and earnings of 13 cents to 17 cents per share in what has historically been a slow quarter for the vendor.

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 5:42:58 PM
re: Arris Expects a Rosy 2012

They didn't mention anything all that new with respect to CCAP, which is a bit odd since they called CCAP their No. 1 priority at Cable-Tec Expo. They did reiterate ongoing progress with the E6000 CMTS edge router, which is basically going to be their CCAP platform, as I understand it.  Bruce McClellend, pres of the BCS unit, said the E6000 is in a lab trial and a live field trial of the small-scale variety. 

But he did say that more trials, and larger scale ones,  are anticipated this year, leading to "formal deployment of the product within the next 12 months here."  So I suppose that's sorta new, though  unsurprising.

No ID of the current lab and field trial customers for the E6000, but Comcast and TWC are Arris's biggest customers and considered to be CCAP champions. Plus,  Comcast does have a CCAP operational-readiness trial well underway. JB


msilbey 12/5/2012 | 5:42:58 PM
re: Arris Expects a Rosy 2012

Any mention of CCAP plans? Stanzione did say that was the company's number 1 priority back in November. Wondering how he thinks CCAP might impact CMTS numbers, and when any shift is likely to start occuring. 

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