Arris Group Inc.
) is likely to become a formidable player in the video
infrastructure and customer premises equipments (CPE) for the
cable TV industry after its acquisition of the cable home
business of Motorola Mobility, a subsidiary of
). Arris currently has a Zacks Rank #2 (Buy).
A recent report of Infonetics Research Inc. stated that the
combined Arris/Motorola constituted 45% of DOCSIS 3.0 CPE market
share in 2012. Individually, Arris commands 29% and Motorola
Mobility commands 16% market share. This figure is well above the
Cisco System Inc.
) 15% market share. Total market size of DOCSIS 3.0 CPE jumped to
$1.6 billion in 2012 from $1 billion in 2011 and constituted
approximately 66% of the total cable broadband CPE revenues in
In Dec 2012, Arris decided to acquire the set-top box and
other related businesses of Motorola Mobility for around $2.35
billion. The merger is estimated to generate $100-$125 million in
annual cost synergies to Arris and is expected to be completed by
the second quarter of 2013, subject to the customary regulatory
So far, Arris remains a small contender in the high-speed
video and Internet delivery market. Together, the merged entity
will have an overwhelming global presence with more than 500
customers in 70 countries. Further, this deal will strengthen
Arris' patent portfolio and provide a license to access several
patents of Motorola Mobility.
Another research firm, Synergy Research Group, also stated
that the Arris/Motorola tie-up may pose serious competitive
pressure on Cisco, the undisputed leader in the video
infrastructure market. In 2012, Cisco's market share in this
segment was 21% followed by 12% of the combined Arris/Motorola
market share. Video infrastructure is a lucrative market
opportunity with total revenue of $34 billion in 2012.
Another growth area for Arris will be DOCSIS 3.0 cable modem
enabled video gateways. The Moxi home gateway is in commercial
deployment with 10 customers. The company is conducting RDK
Gateway trial runs with
). According to Infonetics, the worldwide video gateway market
size may leapfrog from a mere $97 million in 2012 to around $3.6
billion in 2017.
ARRIS GROUP INC (ARRS): Free Stock Analysis
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