Arris Starts Cutting Heads

The winter just got longer and colder for Arris and many of its employees.

Arris Group Inc. (Nasdaq: ARRS) confirmed press reports that it has begun laying off about 10% of its global workforce, or roughly 800 employees, as it continues to struggle with drooping equipment sales to key telco customers, merger uncertainty in the cable space and unfavorable currency exchange rates. The layoffs follow the company's gloomy fourth-quarter earnings call last week, when the big communications equipment supplier reported revenues of just $1.1 billion, down nearly 13% from the final three months of 2014. (See Rough Arris Q4 Buoyed a Bit by Software.)

The layoffs were first reported earlier today by Multichannel News. The publication also reported that more staff layoffs may be on the way as Arris continues to battle "headwinds" in the cable, telco and satellite TV industries.

In a prepared statement, an Arris spokesperson said the layoffs have just begun but did not offer an exact timetable for carrying them out. "We are looking across the entire scope of the ARRIS enterprise to identify areas where we can find cost savings, eliminate redundancies, and increase shareholder value," the spokesperson said. "With this in mind, we have a headcount reduction goal of about 10 percent worldwide. We understand how hard these changes will be for the employees concerned and are committed to helping them through this difficult transition."

The fresh round of layoffs comes less than two months after Arris closed its $2.1 billion buyout of Pace Plc, another large communications equipment manufacturer. Arris carried out an earlier round of layoffs after it gobbled up yet another big equipment vendor, Motorola Home, less than two years ago, shedding about 500 workers.

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The move also comes after Arris Chairman and CEO Bob Stanzione offered up a lackluster financial projection for the first quarter of 2016 on last week's earnings call, acknowledging that "the year is starting out more weakly than we thought it was." But he still expressed some optimism for the rest of the year, citing cable's early rollout of DOCSIS 3.1 gear, mounting customer interest in gigabit broadband services and growing demand for the company's flagship E6000 CCAP platform, as well as capacity upgrades of the R6000 through new software licensing deals.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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