Arris Q4 Whiffs; Q1 Guidance Falls Short; Stock Off 21%
Arris Group (ARRS) shares are sharply lower in after hours trading after the cable equipment provider reported disappointing fourth quarter results and first quarter guidance that was sell short of expectations.
For Q4, Arris reported revenue of $249.6 million and non-GAAP EPS of 16 cents; the Street had been looking for $260.8 million and 22 cents. The company said the weak revenue was mostly due to lower sales of E-MTAs, or embedded multimedia terminal adapters. The earnings miss also reflected lower margins and the dilutive effects of the company’s C-Cor acquisition.
For Q1, the company sees revenue of $270 million to $285 million, with pro forma EPS of 8-12 cents a share, well below the Street consensus estimate of $329.4 million and 19 cents. The company said that while it sees “robust demand from the majority” of its customers, sales to its largest customer - Comcast (CMCSA), I believe - “will be lower.”
In after hours, trading, Arris is down $1.65, or 20.9%, at $6.26; the stock had dropped 46 cents in the regular session.
Don’t know why the street was so surprised. Analysts should have revised EPS expectations down to begin with. It has been obvious for several quarters that Cable Voice growth is slowing, which is the market the EMTAs serve.
Arris management should have preannounced both the missed earnings as well as the lowered guidance for Q1. How can they only find out that their largest customer is scaling back on current quarter orders within the last few days? Don’t they talk to their customers?
ARRS wins new substantial contract from Japan back to back with another substantial contract with Brazil and with exposure in China, Spain and USA, coupled with management’s $100 Million stock buyback understanding the stock’s undervalued pricing, this stock will be selling for $10 within the next ten days and $17-20 within the next three months! Watch the earnings as this is a win-win who understand the demand for such innovative and the speed offered by ARRS’products….ARRS, ARRS! A win-win which Cramer will be talking about as he did recently liking its international exposure!
Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields.
