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Arris Beats on Q4 Earnings and Rev - Analyst Blog

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Yesterday, after the closing bell, Arris Enterprises Inc. ( ARRS ) reported impressive financial results for the fourth quarter of 2013, significantly beating the Zacks Consensus Estimate. Moreover, management provided a strong financial outlook for the ensuing first quarter of 2014.

As a result, in the after-market trade on Nasdaq, the stock price of Arris was up 66 cents (2.36%) to $28.60. Arris currently has a Zacks Rank #3 (Hold).

GAAP net loss in the fourth quarter of 2013 was $2.9 million or a loss of 2 cents per share compared with a net income of $14.8 million or 13 cents per share in the prior-year quarter.

However, quarterly adjusted (excluding special items) earnings per share came in at 49 cents, significantly above the Zacks Consensus Estimate of 42 cents.

Quarterly revenues totaled $1,199.1 million, up a whopping 248.6% year over year and well above the Zacks Consensus Estimate of $1,164 million.

Segment wise, Network and Cloud segment accounted $336.9 million of the total revenue, up 84.9% year over year. CPE segment generated $865.4 million of total revenue, up a substantial 434.9% year over year.

Quarterly Domestic revenues accounted for 68.9% of the total revenue while International revenues contributed the remaining 31.1%. Comcast Corp. ( CMCSA ), Verizon Communications Inc. ( VZ ) and Time Warner Cable Inc. ( TWC ) together constituted 38% of the total fourth-quarter 2013 revenue.

Quarterly gross margin came in at 30.6% compared with 35.8% in the year-ago quarter. However, operating income, in the reported quarter, was $49.4 million against $25.5 million in the prior-year quarter. Quarterly operating stood at 4.1% compared with 7.4% in the year-ago quarter.

Total order backlog of Arris, at the end of the reported quarter, was $538.6 million compared with $222.6 million at the end of the year-ago quarter. The book-to-bill ratio was 1.01 in the last quarter compared with 1.11 in the prior-year quarter.

Arris generated $190.9 million of cash from operations during the fourth quarter of 2013 compared with a meager $11.8 million in the prior-year quarter. Quarterly free cash flow was $172.8 million compared with $4.9 million in the year-ago quarter.

At the end of 2013, Arris had $509.8 million of cash & marketable securities on its balance sheet compared with $530.1 million at the end of 2012. Total debt was $1,744.3 million at the end of 2013 compared with $222.1 million at the end of 2012. The debt-to-capitalization ratio stood at 0.56.

Future Financial Outlook

Management expects first-quarter 2014 total revenue within $1,170-$1,210 million. GAAP earnings per share are likely to be between 5 to 10 cents. Non-GAAP earnings per share are estimated in the 37-42 cents range, excluding 5 cents per share of stock-based compensation expenses. Tax rate is projected at 36%.

ARRIS GROUP INC (ARRS): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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