Arris announced a reorganization following its purchase of Motorola Home from Google. Arris execs asserted that even though Motorola Home has been struggling, it is set to bounce back.

In a conference call with analysts that precedes the release of its second quarter earnings, Arris provided a general outline of how it will reorganize. The company will establish two major divisions, a Network & Cloud unit and a CPE (customer premise equipment) unit.

Network & Cloud – the operation run by group president Bruce McClelland – will include the former Arris CMTS operation, along with its Access, Transport & Supplies (ATS; HFC equipment, transmitters, splitters, etc.) and Media & Communications Systems (MCS; management systems, advanced advertising, workforce management, etc.) products. Network & Cloud will also include the former Motorola Home, Video, headend, CMTS equipment as well as the converged experience products.

The CPE unit will include both cable and DSL modems, EMTAs, gateways and set-top boxes from both companies.

Arris chairman and CEO Bob Stanzione said “the integration of Motorola Home into the new Arris is going pretty well. We're a stronger company with a broader portfolio serving a more diversified customer base.”

During a conference call with analysts, Stanzione explained Motorola Home’s two-year decline as a function of the uncertainty associated with its fate as a unit of Google. Some potential customers shied away, he said.

“Some momentum was lost due to the internal distractions and customer reluctance to expand their business with Motorola Home given the uncertainty around its ultimate disposition,” Stanzione said. “An executive of one of our largest customers told me very candidly that his company was holding back on new business until they were satisfied that Motorola Home would land in a good place.”

Motorola Home has been diligently proceeding with R&D, however, he said. So between the stability represented by its new home at Arris, plus a stream of new products in the pipeline, he expects the operation to bounce back.

“We do anticipate new product introductions in the second half of 2013 in both product segments, which will drive growth,” he said. Stanzione’s comments were drawn from the transcript of the conference call prepared by Seeking Alpha.

Stanzione also provided some forward guidance, expressing cautious optimism similar to what was heard by Cisco CEO John Chambers.

Looking beyond the first quarter, he said, “I see several good reasons for sales and profitability to improve. First of all, the spending environment in general is improving. The economy seems to be slowly recovering, and this is the first year in a long time that service providers are announcing plans for increases in CapEx. A large portion of the increased CapEx will be directed toward infrastructure improvements to expand bandwidth, and the broad deployment of new in-home devices, particularly Whole Home Video gateways capable of delivering cloud-based applications. These products are in our sweet spot and are poised for growth. We're working with major service providers, both domestic and international, to launch new Whole Home Video solutions and high-speed data gateways.”

He said Arris is getting set to launch of the E6000 CCAP-ready Edge Router, while the APEX 3000 QAM is ready for delivery. Additionally, he expects increased deployments of the DreamGallery multi- stream solutions.

McClelland noted on the call that the company has been integrating its Moxi software with DreamGallery, as well as SecureMedia (DRM technology) and a number of other elements.

He said Arris is experiencing a clear trend away from traditional set-tops to advanced video gateways, mostly integrated with Wi-Fi routing.

“You hear operators talk about being upgraded to 3.0,” he said, “Well, that was kind of the first wave. Now they're going back and saying, well, we got to extend even further. Eight channels per service group is not enough. We need to expand capacity beyond that. And so that drives new CPE devices. And then, obviously, the investment in the new head-end infrastructure as they continue to try and add more capacity in the same space, footprint, power, real estate, head-end equipment, and so on.”