Arris Group Inc.
) 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
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
Time Warner Cable
), 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.
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