Arris revenues and earnings took an expected hit in the second quarter as the supplier announced results Wednesday a few weeks after lowering guidance for the period amid “headwinds” caused by ongoing industry consolidation and the strengthening U.S. dollar.
Arris posted non-GAAP earnings of 53 cents per share, down 24.3% year-over-year, on revenues of $1.26 billion, down 11.8% -- all in-line with analyst expectations.
Arris said three customers represented 10% or more of revenues in Q2. That trio represented $561 million, or 45% of total sales, in Q2.
On the CPE side, sales and direct operating profit dropped by 18% and 33%, respectively.
Telco-based video CPE unit volumes dropped 9% versus the year-ago quarter, and cable units dropped 17% from last year’s record levels. Arris noted that it successfully qualified the XG1v3 (for Comcast) and initiated volume shipments.
Broadband CPE volumes were also down 10%, though 80% of those shipped are now WiFi enabled. Arris has also entered field trials with devices based on G.fast, a standard that aims to bring gigabit capabilities to DSL networks.
On the network, shipments of Arris’s flagship CCAP chassis, the E6000, hit a new record as more than 750 units were shipped, and downstream shipments exceeded Q2 levels. Arris said Suddenlink Communications tapped the E6000 for its 1-Gig residential rollout, which is initially being powered by DOCSIS 3.0.
Arris said development and interop testing for DOCSIS 3.1, the emerging multi-gigabit platform for HFC networks are moving forward in anticipation of initial field trials slated for Q4 2015.
Arris still expects to close its proposed $2.1 billion merger with U.K.-based Pace plc in Q4, noting that it has applied for regulatory approval in six jurisdictions, and has received approval in Germany and South Africa. Arris received a second request from the U.S. Department of Justice on June 29.
Looking ahead, Arris expects Q3 revenues of $1,210 million to $1,260 million, with adjusted net income per diluted share in the range of $0.52 to $0.58 and GAAP net income per diluted share in the range of $0.17 to $0.23. That's down from analyst expectations of $0.64 per share on revenues of $1.30 billion.
"Sales, margins, and Non-GAAP earnings were all up quarter over quarter, although not as much as we originally thought,” Arris chairman and CEO Bob Stanzione said in a statement summing up the period. “These results, as expected, are down compared with the second quarter of last year when we were launching an unprecedented number of new products. As we have highlighted, we are encountering headwinds which we expect to continue through 2015, in particular those related to industry consolidations and the strong US dollar.”
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