Arris Group Inc.
(
ARRS
) declared mixed financial results for the fourth quarter of 2011.
GAAP net loss in the fourth quarter of 2011 was $54.7 million or a
loss of 47 cents per share compared with a net income of $11.3
million or 9 cents per share in the prior-year quarter. However,
adjusted (excluding special items) EPS, in the reported quarter,
was 17 cents, exactly in line with the Zacks Consensus
Estimate.
Quarterly total revenue was $281.1 million, up 5.6% year over
year, but failed to meet the Zacks Consensus Estimate of $289
million. Quarterly Domestic revenue was 68.6% while International
revenue was 31.4%.
Comcast Corp.
(
CMCSA
) and
Time Warner Cable Inc.
(
TWC
) together constituted 45.8% of total fourth-quarter revenue.
Quarterly gross margin came in at 37.9% compared with 36.2% in
the year-ago quarter. Operating loss, in the fourth quarter
of 2011, was $67.3 million compared with an operating income of
$17.8 million in the prior-year quarter. Quarterly operating margin
was a negative 23.9% compared with 6.7% in the year-ago quarter.
Total order backlog of Arris, at the end of 2011, was $148.5
million compared with $140.4 million at the end of 2010.
Book-to-bill ratio was 0.98 in the reported quarter compared with
1.08 in the prior-year quarter. In the previous quarter, Arris
repurchased approximately 3.3 million of its common outstanding
shares for a total consideration of $34.4 million.
Arris generated $60.9 million of cash from operation during the
fourth quarter of 2011 compared with $22.6 million in the
prior-year quarter. Quarterly free cash flow (cash flow from
operation less capital expenditure) was $56.5 million compared with
$17.1 million in the year-ago quarter. At the end of 2011, Arris
had $589.9 million of cash & marketable securities on its
balance sheet compared with $620.1 million at the end of 2010.
Total debt was $209.8 million at the end of 2011 compared with
$202.6 million at the end of 2010. At the end of 2011,
debt-to-capitalization ratio was 0.19 compared with 0.17 at the end
of 2010.
Broadband Communications Systems Segment
Quarterly revenue was $212 million, remaining flat year over
year. Quarterly gross margin was 38.3% compared with 38.2% in the
year-ago quarter. Arris shipped a total of 1.2 million CPE units,
46% of which are DOCSIS 3.0. The company also shipped a record high
99,968 C4 CMTS downstream ports. Arris is conducting trial runs for
Moxi Gateway product with six customers, of which two customers are
expected to launch this product commercially in the first quarter
of 2012.
Access, Transport, & Supplies Segment
Quarterly revenue was $51 million, up 18.9% year over year.
Quarterly gross margin was 25.9% compared with 24.8% in the
year-ago quarter.
Media & Communication System Segment
Quarterly revenue was $18.1 million, up 56% year over year.
Quarterly gross margin was 67% compared with 44% in the year-ago
quarter.
Future Financial outlook
Management's guidance for net sales in the first quarter of 2012
will be within the range of $285 million - $305 million. EPS, on a
GAAP basis, are expected within the range of 1 cent to 5 cents.
EPS, on a non-GAAP basis, are expected within the range of 10 cents
to 14 cents. This includes stock-based compensation expenses
of 3 cents per share.
Recommendation
We maintain our long-term Neutral recommendation on Arris.
Currently, it holds a short-term Zacks #3 Rank (Hold) on the
stock.
ARRIS GROUP INC (
ARRS
): Free Stock Analysis Report
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
TIME WARNER CAB (
TWC
): Free Stock Analysis Report
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