Although Arris is still fighting “headwinds” caused by MVPD consolidation paired with a consolidating and shrinking set-top market, one analyst thinks concerns about the supplier's future are a bit overblown, holding that the company remains well-positioned when it comes to the larger IP video transition.

Raymond James analyst Simon Leopold maintained his “Strong Buy” on the stock Monday, and a target price of $40 (at last check Monday, Arris shares were trading at $30.08, down 44 cents (1.44%) for the day). 

“The rapid demise of broadcast video and death of ARRIS's CPE business has been greatly exaggerated and we remain buyers of the stock,” he wrote, referring to Arris’s recently released annual Consumer Entertainment Index survey, which found that the growth/decline of OTT and traditional broadcast TV services, at +1% and -1%, respectively, being almost imperceptible at +1% and -1%.  “This seems to defy the expectations that 2015 would be a key inflection point and the start of a mass ‘cord cutting’ revolution. We see the transition of video from broadcast to IP as a gradual evolution driving product cycles and not a revolution ending the CPE market.”

In the meantime, those who are staying in the CPE business are looking to amass as much scale as possible, whether it’s Arris’s proposed merger with U.K.-based STB rival Pace Plc, Technicolor’s pending purchase of Cisco Systems’ set-top/CPE business, or even Amino’s play for Entone.

That said, he’s still confident with Arris’s long-term strategy, as “the fundamental demand for video equipment remains very healthy, driven by an inevitable structural shift in network architecture toward all IP and CCAP (converged cable access platform) along with telco video distribution.”

Arris, which recently lowered Q2 guidance, is scheduled to post financial results on Wednesday (July 29).

Signaling more vendor consolidation in the sluggish set-top box market, U.K.-based Amino Technologies has inked a deal to acquire Entone Inc. for $73 million ($65 million in cash).

Both suppliers make and sell IP-only and hybrid set-tops and gateways.

Cupertino, Calif.-based Entone, which also sells WiFi adapters and other types of accessories, has been particularly successful in the independent tier 2/3 service provider market using a platform that mixes traditional pay TV and over-the-top video, but has also secured footholds with majors.  Entone, which has also promoting an “legal” Aereo-alternative under which its FusionTV service combines over-the-air and over-the-top video services, has notched recent wins with Vodafone Netherlands, Three River Communications, mobile operator TIM Brasil, and Volia, a Ukrainian cable operator. In 2013, Entone and TiVo announced an agreement to jointly pursue IPTV deals that would also clear the way for Entone to combine TiVo with boxes with or without local DVR storage and focus on the delivery of cloud-based apps and services. 

Privately-held Entone, which has more than 150 customers globally, pulled in revenues of $43.4 million in the fiscal year ended June 30, 2014, and EBITDA of $3.9 million. In the 11 month period from May 31, 2015, Entone generated revenues of $46.7 million and EBITDA of $5.1 million. Entone had net cash of $12 million and net assets of $15.9 million as of May 31, 2015.

Amino said the deal will help it boost its global footprint and scale while also removing a direct competitor from the market. It expects financial synergies of about £1.0 million (US$1.5 billion) in the full year after the deal is closed. They expect to close the deal in the third quarter.

Scale is also a driving reason behind Arris’s proposed $2.1 billion acquisition of Pace Plc, the U.K.-based maker of set-tops, video software and broadband access gear.

"The proposed acquisition of Entone has the potential to transform our business and broaden our capabilities and market reach globally across IPTV, hybrid broadcast and a range of connected home solutions,” Amino CEO Donald McGarva said in a statement, claiming the deal also aligns with Amino’s recent buy of cloud-TV platform provider Booxmedia.

"Bringing together Amino and Entone would create a significant new presence in the pay-TV market with solutions and skillsets that are highly complementary,” added Entone CEO Steve McKay. “We share a very similar vision as to how our industry is changing and the kinds of solutions that are required to address both existing and new customers."

Canaccord Genuity has been appointed as financial adviser and joint bookrunner in connection with the acquisition.