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Arris Group Inc. (ARRS - Analyst Report) – a leading video and broadband gear manufacturer – has recently entered into a deal with a major Taiwanese MSO, China Network System Co. Ltd. (CNS). Per the contract, Arris will supply high-definition set-tops (HMC3000) and a middleware platform (KreaTV) to China Network System.

Nationwide, China Network serves more than one million subscribers. So converting its basic video subscriber base into a fully digitalized format will create considerable opportunities for Arris going forward.

By installing Arris’s two-way applications over its IP network and digital TV service, CNS will not only be able to trim down costs but will also deliver high-quality video services. Moreover, CNS can support value-added services over the enhanced network.

Arris will also offer HFC solutions, DOCSIS3.0 cable modems (the SB6141) & gateways (the SBG6580) to CNS. The modems and gateways will support two-way applications on KreaTV.

In the fourth quarter of 2013, Arris’ total revenue stood at $1,199.1 million, up a whopping 248.6% year over year. The company’s Customer Premises Equipments (CPE) segment generated $865.4 million of total revenue, up by a substantial 434.9% over the prior-year quarter. Quarterly Domestic revenues accounted for 68.9% of the total revenue while International revenues contributed the remaining 31.1%.

Comcast Corp. (CMCSA - Analyst Report), Verizon Communications Inc. (VZ - Analyst Report) and Time Warner Cable (TWC - Analyst Report) have together contributed 38% of Arris’ total revenue in the fourth quarter of 2014. Hence, we believe that a strong product portfolio and continuous contract wins will significantly boost the company’s top line moving ahead.

Currently, Arris Group Inc. carries a Zacks Rank #3 (Hold).

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