Arris Group, Inc. (ARRS), a leading provider of communication infrastructure for broadband networks, announced mixed financial results for second quarter 2008.
The companys overall revenue growth was limited as a result of softening sales to Comcast (CMCSA) and Time Warner Cable (TWC). Net income, however, was above our estimates due to effective expense control and the introduction of higher margin products, following its C-COR acquisition. Arris maintains a solid order backlog, a favorable book-to-bill ratio, and strong free cash flow. We also believe the deployment of switch-digital video will ramp up in early 2009 to support Arris' growth projections.
On the other hand, it is our opinion that the company has a limited range of product offerings as its EMTA line of solutions may have reached a demand plateau. This, together with ongoing global economic uncertainties, may hinder valuation improvements over the near-term. We maintain our Hold
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