Arris CEO Bob Stanzione insists that he's not worried about a sweeping new Cisco deal to supply advanced new "Worldbox" set-top boxes to Charter.
At the 17th Annual Needham Growth Conference Tuesday, Stanzione was adamant that the Charter Communications Inc. agreement will not mean that Cisco Systems Inc. (Nasdaq: CSCO) will take any set-top market share away from Arris Group Inc. (Nasdaq: ARRS). Although the financial industry may have come to that conclusion after Cisco's announcement with Charter at CES last week, he declared that this interpretation is "absolutely incorrect."
In a joint press reception last week, Cisco and Charter showed off a new Worldbox set-top that the operator will deploy in 2015. However, Charter CEO Tom Rutledge was careful to note that the company's new cloud-based Spectrum Guide will run on virtually any type of set-top, and he specifically called out Arris as another important set-top partner for Charter. (See Charter Thinks Outside the 'Worldbox'.)
The advantage of the Worldbox design is that, because it supports a downloadable conditional access system (Cisco's DCAS technology), it can be deployed and redeployed in any market with any cable operator. As Stanzione explained, "This is a big advantage for operators because over the years they've swapped properties."
However, Stanzione also detailed how the official design for Charter's Worldbox is still being firmed up, and noted that Charter will put the actual supply deal out to bid later this year. He said Arris will have an equal opportunity to bid for the business, and that he doesn't see the Cisco announcement as changing Arris' ability to sell customer premises equipment (CPE) to Charter.
In addition to talking about Charter, Stanzione made several comments at the Needham financial event about the pending mergers between Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), and between AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV). On the Comcast transaction, Stanzione said he thinks that once it's complete, "there will be an acceleration of [capital] spending." He added that he's been getting direct signals from customers to that effect, and that he specifically expects Comcast to upgrade key markets like New York and Los Angeles to the popular X1 system. Stanzione argued that he also believes regulators will place conditions on the cable merger that will make broadband upgrades necessary across the country.
On the AT&T front, Stanzione reminded his audience that Arris has a strong relationship with the telecom operator and that this partnership should help Arris make inroads at DirecTV if and when the acquisition is completed. He pointed out that Arris already does a small amount of satellite TV business with BCE Inc. (Bell Canada) (NYSE/Toronto: BCE), which means his company has satellite capabilities in house. Conceding that Arris hasn't really leveraged its satellite set-top expertise yet, Stanzione stressed that "we're going to start doing that."
— Mari Silbey, special to Light Reading