Customer premises equipment still accounts for two-thirds of Arris’ sales, but network infrastructure is significantly more profitable for the company.
This is according to new CEO Bruce McClelland, who broke down the top pay-TV vendor’s business drivers for investors this morning at the Drexel Hamilton Telecom, Media & Technology Conference.
"CPE generates a lot of cash for the company to invest in other parts of the company,” McClelland said. “But CPE is not growing a lot — maybe a few percent a year. On the network infrastructure side, there’s plenty of room to grow both domestically and internationally."
After reporting record second-quarter sales, Arris is projecting full-year revenue of as much as $6.8 billion.
Driving the growth, McClelland said, is the fact that Arris’ cable operator clients are on the “front-end” of investment cycles for technologies like DOCSIS 3.1 that are fueling gigabit-speed broadband expansion.
McClelland, who took over the CEO reins from founding chief executive Bob Stanzione just last week, was asked if Arris would try to compete with incumbents like Adran in the area of PON. He said Arris will debut PON products at the upcoming Cable-Tec Expo, but those will be specifically targeted to cable operators.
“PON is a pretty challenging market,” he said. “We’re pretty thoughtful about how we come tag those markets.”
McClelland also reiterated Stanzione’s comments during Arris’ second-quarter earnings call about the health of the set-top market.
“I think there’s a long tail on set-tops,” McClelland added. "There’s new technologies coming into these products — they’re getting more complex, not less complex." He specifically mentioned 4K, HDR and home network as factors driving the set-top market.
“It’s fun to talk about the set-top going away, but that’s just not the reality of the market,” he said.
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