With its $2.35 billion acquisition of Motorola Home coming to a close Wednesday morning, Arris Group believes it’s not just better positioned to compete with Cisco Systems in the U.S. cable market, but is now armed to take on any supplier on the globe.
“I think it clearly gives us the scale to compete with anyone in the world,” Arris chairman and CEO Bob Stanzione said in an interview Wednesday. “I think it creates a company that’s the premier provider of video and broadband technology in the world. We can provide value throughout the video delivery chain, from beginning to end, from content management and creation all the way to the screen in the home.”
Acquiring Motorola Home makes Arris the top U.S. supplier of set-tops, diversifies its customer base and expands its product portfolio. But there are also some significant overlaps in product areas such as cable modems, cable modem termination systems (CMTSs) and edge QAMs. Arris, Stanzione said, does not intend to sell off any redundant product lines.
“We’re not planning on shedding any assets. We will be combining programs where there are overlaps,” he said, noting that Arris’s own Moxi gateway platform (coming way of Arris’s $20 million purchase of Paul Allen’s Digeo in 2009) “complements the Motorola product line quite nicely.”
Stanzione said Arris also intends to combine its program for the Converged Cable Access Platform (CCAP), a next-gen architecture that will combine the CMTS and edge QAM and help cable operators move to an all-IP platform, with Motorola's. Arris is already starting to ship the E6000, a CCAP-ready product that’s initially being configured as a high-density CMTS.
And the streamlining will reach other areas. When Arris announced the deal in December, it said the combination with Motorola Home would create between $100 million to $125 million in annual synergies. Arris has not announced how much of that streamlining will affect the new, combined base of about 7,000 employees.
“There will be some overlap, there’s no question about that,” he said. “We’re going to do that as quickly as possible and keep the employees in the loop to know what’s coming to the very best of our ability,” he said noting that the cost synergies will come from a mix of sources, including cost of goods, G&A, marketing and sales, as well as R&D.
“So, it’s kind of spread across, but I emphasize that when we’re finished we’re going to have more resource, not less resource than what we start out with. We should be even stronger,” Stanzione said.
Motorola Home’s headquarters in Horsham, Pa., “will continue to be one of the very, very key facilities” for Arris, Stanzione said. “There are a couple of areas where we have Arris facilities close to Motorola Home facilities that we may move a few employees from one building to another, but we don’t plan any facility closings.”
But don’t expect to see the Motorola brand gracing new cable products for much longer. “It [the Motorola brand] will be phased out over a period of one year. We have one year to get that done. Our aim is to have that done on or ahead of schedule,” Stanzione said.