Arris income down, outlook optimistic as Comcast deploys Gen 2 CCAP

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Business looks dandy at Arris, even with an operating loss of $10.9 million for the fourth quarter, down from $72.5 million in operating income the previous year. Finances were hit by the equipment maker’s $822 million acquisition of Ruckus Networks, which Arris claims is already contributing to results and building a platform for future growth.

As revenues slipped slightly by 1% to $1.74 billion for the quarter and down 3.1% to $6.6 billion for 2017, CEO Bruce McClelland spoke about shifting to broadband in the CPE business being central to Arris’ strategy going forward, in other words moving away from legacy TV set tops. The increasing dominance of Arris in the CCAP market is expected to boost 2018 revenues along with expansion in its Network and Cloud operations.

It was fitting then that Arris announced a major win to coincide with its results, with Comcast deploying Arris’ E60000 Gen 2 modules – a win we expected given Comcast had previously expressed interest in using Arris’ E6000 routers to deploy Remote PHY (R-PHY).
US operators Grande Communications, TDS Telecom and WOW, plus Austria’s Liwest, Portugal’s NOS and Poland’s Toya have also rolled out Arris’ second generation modules for its E6000 Con-verged Edge Router (CER) CCAP platform this week.

Arris is a major force in this market, along with Cisco, Nokia, Teleste and Casa Systems, but US encoding vendor Harmonic made a bold claim this week, stating it has deployed the world’s first virtualized cable access network for Swedish operator Com Hem us-ing its CableOS virtualized CCAP product – something we will dive into in more detail next week.
Altice USA, Liberty Global, LG U+ and SK Broadband in South Korea, NBN in Australia and Multimedia Polska, to name a few, are also operator customers using E6000 CER products for broadband services – so arguably Arris is the market leader here and hasmade strides in CCAP since its E6000 CER first launched in 2012. Additional operators around the globe currently running trials are lining up for Gen 2 deployments, according to Arris, with the seven operator announced wins apparently representing a mere subset of the initial wave of E6000 Gen 2 deployments.

Regarding Ruckus, employee equity payouts relating to the acquisition amounted to $61.5 million of Arris’ total $77.8 million in operating activities during the fourth quarter.
Comcast was the only operator of the seven not to provide a cus-tomer appraisal quote, but Arris still received some nice words. WOW COO Cash Hagen said, “We’re determined to not only pro-vide our customers with more bandwidth but to provide them with infrastructure that will keep pace with tomorrow. The E6000 Gen 2 modules have enabled us to do exactly that without undertaking a significant investment or overhauling the hard-ware we already have in place.”

“Our fourth quarter results capped a year in which we made important strategic and financial strides in positioning Arris for long-term profitable growth. The Ruckus acquisition is already contributing to results and creates a more compelling, diversified platform for growth as we deliver connectivity solutions across the enterprise and service provider markets. With respect to the Q1 2018, we are estimating revenues in the range of $1.575 billion to $1.625 billion. For full year 2018, we expect revenues to be in the range of $7.1 billion to $7.35 billion,” said McClelland.

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Peter has been involved in technology for 35 years, and is now the Lead Analyst at Faultline, a digital media research service offered by Rethink Technology Research. In his work at Faultline Peter has built an understanding of wired and wireless Triple Play and Quad Play models including multiscreen video delivery, taking in all aspects of delivering video files including IPTV. This includes all the various content protection, conditional access and digital rights management, encoding, set tops and VoD server technologies. Peter writes about all forms of video delivery is fascinated with the impact IP is having on all of the entertainment fields, and calls his service Faultline because of the deep faults which can devastate large established companies operating in the fields of consumer electronics, broadcasting, content delivery, content creation, and all forms of telecommunications operators, as content begins to be delivered digitally. Peter is currently advising major players and start up ventures in this field, and has both written and validated business plans in the area.

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