Arris Group Inc. (ARRS - Analyst Report) – a global technology leader in the development of advanced cable telephony, next-generation high-speed data network, started developing E6000 converged edged router for the cable MSOs, which will eventually impact the top-line growth of Arris from this quarter onwards.
During the second half of 2012, Arris introduced E6000 router, which will act as a powerful C4 cable modem termination system (CMTS) of the company while it can be converted into a Converged Cable Access Platform (CCAP).
CCAP will help the carriers to maximize bandwidth, simplify the operational structure and evolve according to the subscribers’ demand. E6000 will integrate edge QAM legacy video architecture and CMTS DOCSIS IP network of Arris, so that the cable TV operators can get a readymade integrated-IP platform.
Comcast Corp. (CMCSA - Analyst Report) and Time Warner Cable (TWC - Analyst Report) are the two largest customers of Arris, with combined video subscriber base of more than 30 million. Moreover, these two constitute 51.1% of Arris’ total revenue and are gradually exploring CCAP, having nearly completed the deployment of Docsis 3.0 technology across both the customers’ footprints.
Hence, both huge subscriber base and the deployment of Docsis 3.0 technology may bolster the demand for Arris’ new E6000 router.
In the recently concluded quarter, Arris’ total revenue was $344 million, up 22.4% year over year but fell shy of the Zacks Consensus Estimate of $354 million. However, the company exited the quarter with a strong order backlog of $222.6 million.
Arris has decided to purchase the cable set top box business of Motorola Mobility, which is a subsidiary of Google Inc. . The deal is expected to get regulatory approval by the second quarter of 2013. Successful completion of the deal will further strengthen the position of Arris going forward.
Currently, Arris Group carries a Zacks Rank #2 (Buy).