Arris Group Inc. ( ARRS - Analyst Report ) recently struck a deal with U.S.-based cable company Suddenlink Communications to offer IP-capable video gateways.

Industry analysts expect Arris to fetch revenues of $41.3 million, provided Suddenlink manages to make inroads in the digital market with Arris‘ popular Moxi gateways over the next four quarters.

Moxi gateway is an innovative IP video gateway that replaces the existing cable set-top box and DVRs. In the first quarter of 2012, Buckeye CableSystem and WideOpenWest Holdings LLC launched Moxi home gateway, which is gaining popularity as most cable and MSO operators are looking forward to deploy it. Even management remains highly optimistic with its Moxi gateway as it expects to generate $100 million of revenue in 2012.

In order to capitalize on the market opportunity for Moxi, Arris has decided to integrate tru2way middleware stack with Moxi. This middleware is supported by several large cable MSOs including Comcast Corp. ( CMCSA - Analyst Report ) , Time Warner Cable ( TWC - Analyst Report ) , Cablevision Systems, Cox Communications and Bright House Networks. However, the integrated middleware version of Moxi will not be deployed before 2013.

Innovative product launches, a huge order backlog and continuous acquisitions coupled with huge demand for DOCSIS 3.0 technology will act as tailwinds for Arris going forward. On the downside, stiff competition and higher customer concentration coupled with lack of industry diversification may affect the company’s profitability in the long term. We thus maintain our long-term Neutral recommendation for Arris.

Currently, Arris has has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Arris Group Inc. is a global technology leader in the development of advanced cable telephony, next-generation high-speed data network, demand driven video solutions, operations software, and broadband access equipment.