Arris Enterprises Inc. ( ARRS ), a leading video and broadband gear manufacturer, recently retrenched about 700 employees, which accounts for around 7% of its total workforce. The company is restructuring its business model, after acquiring the Home businesses of Motorola Mobility, a subsidiary of Google Inc. ( GOOG ).
This was necessary after the acquisition was made in April 2013. The merged entity is expected to generate a cost synergy of $100 - $125 million per annum.
From the second quarter of 2013, Arris will report in two business segments instead of the current three business segments. The new segments will be Network & Cloud and CPE (Customer Premises Equipments). The Network & Cloud segment will include Arris' existing CMTS EMP, Access, Transport & Supplies, Media & Communication Systems products.
This segment will also include Arris' Home, Video, head-end, CMTS and the converged products. On the other hand, the CPE segment will comprise Cable and DSL modems, EMTAs, gateways and set-top boxes of both Arris and Motorola Mobility.
With Motorola Mobility's Cable Home business in its portfolio, Arris is likely to become a formidable player in the video infrastructure and CPE for the cable TV industry. A report of Infonetics Research Inc. stated that the combined Arris/Motorola constituted 45% of the DOCSIS 3.0 CPE market share in 2012. This figure is well above the second-ranked Cisco System Inc. 's ( CSCO ) 15% market share.
Last month, Arris received a boost from its largest customer, Comcast Corp. ( CMCSA ) as the latter has started commercially deploying the company's E6000 Converged Edged Router. Furthermore, Comcast will be launching Arris' XG1 gateway for its innovative X1 TV service from the third quarter of 2013. Arris currently has a Zacks Rank #3 (Hold).
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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.
