News Column

Arris value rises on Comcast-TWC plans

February 19, 2014

By Joseph N. DiStefano, The Philadelphia Inquirer

Feb. 19--Shares of Arris Group Inc., the Georgia-based video-equipment maker whose largest employment center is the former General Instruments plant in Horsham, have risen to a 13-year high of nearly $29 a share since two of its largest customers, Comcast Corp. and Time Warner Cable, announced plans last week to merge.

Arris says Comcast and Time Warner together account for nearly half its sales. Arris employs around 800 at the 500,000-square-foot Horsham complex, built in the early 1990s with over $10 million in state subsidies.

The plant had employed 1,000 under previous owner Motorola Corp. Arris bought the plant in 2013 from Google Inc., which had purchased it from Motorola in 2011. Arris employs around 6,500 worldwide.

Past cable company mergers have led to "order delays and integration disruptions," followed by a rush of higher spending on set-top boxes and other equipment once the deals are settled, noted Denver-based cable analyst Brian Coyne, in a report to clients of Dallas-based National Alliance Capital Management last week.

But in this case, much of the order slowdown may have already taken place during the months when Comcast and rival cable companies were negotiating possible combinations with Time Warner, Coyne added.

If the deal makes it past regulators and shareholder votes, Comcast and Time Warner will both need "to aggressively develop new video and data platforms," and Arris is "arguably the most important technology partner for both operators," Coyne concluded.

Arris has developed equipment that helps Comcast send video through a secure Internet Protocol-based network that is limited to paying customers. Buying Time Warner could mean millions more Arris products will be installed.

But Arris boss Robert Stanzione, in an interview with Multichannel News Tuesday, after shares had substantially risen, said his company is adopting a "wait-and-see" approach.

Arris plans to report earnings Wednesday.

Arris has been trying to free itself from dependence on the big cable companies by selling more to AT&T, Verizon and foreign customers, Stanzione told investors at a Raymond James Financial Inc. conference last year.




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Source: Philadelphia Inquirer (PA)

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