Arris' Q4 revenue up, but pay-TV mergers point to jagged 2015

Arris reported a 6 percent rise in fourth quarter revenue to $1.26 billion, beating analysts' consensus forecast.

However, during the telecom technology giant's Q4 earnings call Wednesday, news of its fourth-quarter performance took second stage to what the company predicts will be a very down-and-up 2015.

First, the bad news: A wave of uncertainty and network-investment paralysis is causing Arris to downgrade its own Q1 forecast. Not only are the pending mergers of Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC), and AT&T (NYSE: T) and DirecTV (NASDAQ: DTV), forestalling network investment, there is also the sale of Verizon's (NYSE: VZ) wireline business to Frontier Communications to deal with.

"We have short-term headwinds," noted Bob Stanzione, Arris CEO, to investors.

However, Stanzione believes business will pick up significantly toward the latter half of 2015, once regulation tied to all the ongoing M&A activity is sorted out.

"Based on conversations that we are having with our customers, we believe that there will be an increase in spending later on in the year, particularly on the cable side of the business where these three companies that are involved in this transaction, Time Warner, Comcast and Charter (NASDAQ: CHTR) are going to kind of shuffle things around and we'll soon have three companies," Stanzione said.

He predicted that the complicated three-way transaction involving Comcast, TWC and Charter--should the FCC approve the deal--should generate new business.

"There are a lot of property swaps that are involved, and there will have to be investments in those networks in order to come up with the standard operating procedures that each of those companies have," Stanzione added.

Stanzione also said that Arris expects DOCSIS 3.1 field trials to begin later this year.

For more:
- read this Arris press release
- read this Seeking Alpha transcript

Related links
Arris reports 32 percent revenue spike to $1.4B
TWC rolls out six-tuner Arris DVR in NYC, L.A.
Arris to tout OBI-conquering RFoG solution at Cable-Tec Expo

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