Arris Group reported increased revenue and a modestly lower net profit in its second quarter of 2007, as compared to a year ago. The company has been profiting from product lines that help its cable industry customers provide the triple play and provide services for small and medium businesses. Arris said it anticipates that will be the case “for many years into the future.”
A key element of future success will undoubtedly be Arris’ recent selection by Comcast to provide edge QAMs for Comcast’s imminent rollout of switched digital video (see accompanying story, “Comcast taps Arris…”).
Arris reported Q2 revenue of $252.7 million, up 14.9 percent from Q2 2006, and also up 7.4 percent from the immediately preceding quarter. Net profit in the quarter was $23.3 million, compared to $24.8 million a year ago.
Broadband product revenues were down to $77.4 million in the second quarter of 2007 as compared to $98.8 million in the second quarter of 2006, which the company attributed to the previously anticipated and disclosed decline of CBR telephony product sales.
According to analyst Anton Wahlman, Arris’ dependence on VoIP cable modems increased during the quarter, while the CMTS-centric business saw a decline. “We believe this decline was due to what we wrote about three months ago: An expensive swap-out of CMTS equipment at Time Warner Cable and perhaps also another account, Cablevision,” Wahlman wrote. “In other words, Arris is giving up near-term financial benefit for a larger market share in a couple of key accounts. This may just be the right thing to do for the longer term, but it is not helping the EPS right now.”
Bob Stanzione, Arris chairman & CEO, said, “As we enter the second half of 2007, our overall business looks very promising as our customers introduce new bundled service offerings to their customers and prepare to enter the small and medium-sized business markets with ARRIS products.
"Increasing competitive pressure on our customers, demands for more speed driven by new applications and services and demand for higher reliability and service standards for superior user experience are expected to sustain capital spending in the industry,” Stanzione added.