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Arris Plows Forward, Eyes Moto Home Lift

Arris Plows Forward, Eyes Moto Home Lift 2/10/2013 7:00 PM Eastern

Arris Group keeps bringing home the broadband bacon — and its pending takeover of Motorola Mobility’s Home division from Google promises to give it a much bigger slice of both the video and data market, barring any big hiccups.

For the first quarter, Arris expects revenue to climb 19% year over year, driven by an uptick in sales of cable modems and other customer-premises equipment.

Arris chairman and CEO Bob Stanzione told analysts the company’s next-generation cable-modem termination system, the E6000, has been deployed by at least one customer and is running “live traffic.” The vendor will book its first revenue from the E6000 in the current quarter; while that will be a “pretty modest” figure, Stanzione said, “The demand for that appears to be pretty darn healthy.”

For the fourth quarter of 2012, Arris posted revenue of $344 million (up 22% year over year but down 4% sequentially from the third quarter). The company reported a net profit of $14.8 million compared with a net loss of $59.6 million in the fourth quarter of 2011.

In the fourth quarter, Arris’s DOCSIS 3.0 cable-modem termination system downstream port shipments were 105,246, up 29% sequentially. The vendor shipped 2.27 million CPE units, down 14% from a record 2.63 million devices in the third quarter.

“We walk away with a net positive picture for Arris’ prospects for the full year,” Simon Leopold, a communications equipment analyst with Raymond James, wrote in a research note. “The pending Motorola acquisition also supports upside to the shares, yet presents integration and execution risks.”

Among those challenges: Combining the CMTS product road maps of Arris and Motorola Home around a single architecture that meets CableLabs’ Converged Cable Access Platform specification for headend equipment.

On the call with analysts, Stanzione said the financing commitments for the $2.35 billion cash-andstock acquisition are nearly complete. “Integration teams are working their way on transition plans,” he said. “We still anticipate the closing can occur in Q2, but we are now in that awkward period as we await [Department of Justice] approval.”

Google reported that Motorola Home generated about $820 million in sales for the fourth quarter of 2012 with an operating margin of 4.3% — below the unit’s 9% range in previous quarters, Leopold noted.

September