On Apr 11, 2014, we issued an updated research report on
Arris Enterprises Inc.
). Strong demand for home gateways, large contract wins, coupled
with the acquisition of the cable set-top box business of
Motorola Mobility has transformed the company into an integrated
equipment supplier in the high-speed video and Internet delivery
market. As a result, the company raised its guidance for the next
quarter of 2014.
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Arris has delivered positive earnings surprises in three of the
last four quarters, with an average beat of 41.84%. The company
reported strong fourth-quarter 2013 financial results with both
the top and the bottom line surpassing the Zacks Consensus
With Motorola Mobility's Cable Home business in its kitty, Arris
is likely to become a formidable player in the video
infrastructure and customer premises equipment for the cable TV
industry. In the reported quarter, the company generated a
whopping 248.6% year-over-year growth in revenues with both the
Network and Cloud and CPE segments achieving 84.9% and 434.9%
year-over-year improvement, respectively. On the back of such
strong sales, Arris has also raised its revenue outlook for the
next quarter of fiscal 2014.
On the downside, Arris is facing stiff competition from large
video infrastructure gear manufacturing companies, namely,
Cisco Systems, Inc.
) and LM Ericsson. Notably, customer concentration remains high
for the company. In the fourth quarter of 2013, the two large
cable TV operators, namely,
Time Warner Cable
) together accounted for 25.5% of the total revenue of Arris.
Recently, Comcast is planning to acquire Time Warner Cable which
is expected to significantly impact Arris' top line in the
Arris currently carries a Zacks Rank #3 (Hold).