Arris reported its fourth quarter and 2007 results yesterday, which included net income dropping to $9.6 million, or 8 cents per share, down from $70.3 million, or 64 cents per share, a year ago.
Fourth-quarter 2007 revenues of $249.6 million grew by $15 million, or 6 percent, as compared with the fourth quarter of 2006. But revenues decreased by $5.1 million, or 2 percent, when compared with the third quarter of 2007. Fourth quarter 2007 revenues included approximately $6.6 million of post-acquisition sales of former C-Cor products.
"2007 was a year of growth and outstanding execution on all fronts for Arris," said Arris CEO and Chairman Bob Stanzione. "Our products achieved continued success throughout the world as we maintained our leadership position in key technology areas. We were able to add significant new products, enhance key customer relationships and substantially add to our outstanding talent pool as we successfully completed the acquisition of C-Cor.”
Stanzione cited lower sales of embedded multimedia terminal adapters (eMTAs) to Comcast as the primary reason for lower-than-previously-projected first-quarter revenues. Comcast signed a purchasing agreement with Thomson for eMTAs last year, which led to fewer orders for Arris.
FBR Group cable and broadband analyst Brian Coyne said the Thomson contract had the biggest impact on Arris’ fourth-quarter numbers.
“I think it caught people off guard when Thomson won the contract in mid-to-late July last year,” Coyne said. “I think people were also surprised at how quickly the deal with Thomson ramped up.”
Coyne said the second impact on Arris that was also related to Comcast was the amount of inventory Comcast still has on hand in the first quarter.
“On the conference call, Arris thought Comcast would start buying again by the end of the (first) quarter, but that’s not for another month and a half,” Coyne said. “It’s still going to take Comcast most of this quarter to work off the inventory that it has.”
Arris’ first quarter revenues are projected to be between $270 million and $285 million, compared with estimates of $328 million by Thomson Financial.
Coyne also said that Arris isn’t turning a profit yet on its D5 Universal edgeQAM, which impacted the fourth quarter, as well. Comcast is the main customer for Arris’ U-eQAM, but Coyne said it could take several quarters before the U-eQAM becomes profitable for Arris. Arris is still selling the C-Cor CHP eQAM platform to Time Warner Cable.
More Broadband Direct: