The integration of IP into traditional cable TV products as well as increased momentum for IP-based home networking consumer premises equipment (CPE) will drive Arris' (Nasdaq: ARRS) business throughout the rest of the year and especially into next year, company executives indicated during a second quarter earnings call.
The early part of the year was a time to mesh in the Motorola Home business that Arris acquired at the end of last year. The latter part will be to develop and deploy the products that come from the newly combined company as MVPD players demand increasingly connected and complex consumer premises gear.
"We do see momentum rebuilding with a pipeline full of new products that are scheduled for deployment later this year," Arris chairman-CEO Robert Stanzione said during the earnings call.
Key among those new products are those that make IP a prominent part of the home entertainment system for multiscreen TV Everywhere offerings, he continued.
"Moxi Home Solution deployments are accelerating and we've recently launched new IPTV and DVD set-top solutions at Bell Canada (NYSE: BCE) and at Vectra in Poland, respectively," Stanzione said, noting that the vendor was also "recognized by AT&T (NYSE: T) with the Supplier of the Year Award."
The products Arris is supplying are necessarily more complex to incorporate both Motorola's base platforms and meet demand for home networks that use IP to feed a multitude of consumer electronics devices, said Larry Robinson, corporate vice president and general manager of home devices.
"We find ourselves kind of in the midst with many operators going through and changing their in-home ecosystem, which puts us in a situation where we're developing new platforms that obviously take time to get introduced into the market," Robinson said.
At the same time, "we are seeing … more traditional set-top box sales soften or decline over a period leading up to the introduction of these new platforms," he added, placing the total decline at about 8 percent to 10 percent less than 2012.
Robinson said that there are "four to six new products that are in the pipeline that we'd like to see launched" and that the fourth quarter will be a period of ramping up into the first half of 2014.
Right now, Robinson said, the CPE business in general is "going through a period of inflection as many, particularly cable operators, shift to IP to support multiscreen experiences and that obviously applies to the telcos' side as well. The industry is going through a significant inflection point (and) I think we're well positioned to support that migration."
In fact, said Stanzione, Arris itself is "ahead of schedule in some of the plans that we had for generating synergies in this business" with the integration of the Motorola Home product line.
"There are tailwinds in the market that I think we can benefit from … so we're looking forward to improving results as the year goes on and certainly into next year," he concluded.
- here's the earnings call transcript
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