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Arris Unveils Release 8.1 Software

Zacks Equity Research

Arris Group Inc. (ARRS), a global technology leader in the development of next-generation high-speed data network, has unveiled the Release 8.1 software for its industry leading Cable Modem Termination System (:CMTS) business. The latest offering will augment the performance of its existing C4 CMTS and C4c CMTS line of products.  

Release 8.1 along with the System Control Module 3 (:SCM) provides certain improved features including higher performance for control plane related tasks like IP Detailed Record (:IPDR), Simple Network Management Protocol (:SNMP) and Command Line interface among others. Additionally, this feature rich software can support DOCSIS 3.0 upstream channel bonding with IPv6 capabilities.

CMTS is an equipment, typically placed in a piece of headend and are used to provide high speed data services over cable internet or voice-over Internet Protocol (:VOIP) technology. Arris C4 CMTS along with its upgraded features support upstream services in as low as 5 MHz frequency and as high as 85 MHz, thereby enabling operators to use more spectrums for future services in a cost effective manner. The company has shipped 75,662 C4 CMTS downstream ports in the second quarter of 2012.

Arris will benefit from the intense competition between cable operators, satellite carriers and telecom service providers for broadband market share. As residential VoIP and HDTV services continue to grow, operators have started dealing with increased network traffic, resulting from robust demand for video download and file sharing. We believe Release 8.1 software will be a value addition to Arris’s already popular CMTS product line and will strengthen its already impressive order book.

Arris’ second quarter 2012 revenue was $349.3 million, up 31.4% year over year and 2.1% from the Zacks Consensus Estimate of $342.0 million. Domestic revenue for the quarter was 74%, while International revenue was 26%. Two of Arris’ biggest clients – Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) – together constituted 49.1% of the total second-quarter revenue.

We are maintaining our long-term Neutral recommendation on Arris Group Inc. The company also retains a Zacks #3 Rank, implying a short-term Hold rating.

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