Arris Group Inc.
), a cable equipment manufacturer along with Pace Plc have
submitted the most compelling bid for
) Motorola Home Business, as reported by Bloomberg. The Motorola
Home Business mainly sells set top boxes and equipments to cable
companies. Pace Plc is a leading Yorkshire-based set top box
Both Arris and Pace have outpaced multiple bidders for the
unit, which Google has been trying to sell to revamp Motorola's
ailing smartphone business. Google plans to fetch around $2
billion from the transaction.
Although the final deal depends how the two parties agree on
several financial complexities, various industry sources
forecasted that it may get cleared by the end of 2012. Google
plans to retain some of its equity and patent ownership, which
might prevent Arris to go through the deal, fearing management
In May this year, Google acquired a 100% stake in Motorola
Mobility in an all cash deal worth $12.5 billion. Motorola
Mobility's impressive portfolio of 17,000 patents will allow the
search engine giant to compete more efficiently with the likes of
) and Samsung Electronics Co. as the smartphone battle
intensifies around the world.
Recently, Arris' third-quarter financial results surpassed the
Zacks Consensus Estimates. The company's Broadband Communication
Systems segment recorded a quarterly revenue growth of 39.2% year
over year and has shipped 81,364 C4 CMTS downstream ports.
If Georgia-based Arris succeeds in acquiring the unit then it
will become a dominant CMTS (cable modem transmission system)
player behind market leader
). Moreover, Arris could witness considerable revenue
contribution for its set top boxes as the demand for the same is
expected to rise following the deal.
However, on the downside, the company would need to raise
money in order to finance the transaction, which in turn could
impact its debt position. Motorola's patent-infringement
) is also an additional cause of concern for the company.
We maintain our long-term Neutral recommendation on Arris
Group Inc. Currently, it holds a Zacks #3 Rank implying a
short-term Hold rating on the stock.
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