Arris Beats Zacks Estimates – Analyst Blog

Yesterday after closing bell, Arris Group Inc. (ARRS) declared better than expected first quarter 2010 financial results. GAAP net income in the first quarter was $19 million or 15 cents per share compared to a net income of $12.9 million or 10 cents per share in the prior-year quarter. Adjusted (excluding special items) EPS, in the reported quarter was 22 cents, significantly above the Zacks Consensus Estimate of 18 cents.

 

Quarterly total revenue of $266.7 million was up 5.2% year-over-year. This was mostly in line with the Zacks Consensus Estimate of $267 million. The increase in revenue was driven by a massive growth of traffic for both wireless data and Internet TV together with growing momentum of DOCSIS 3.0 (Wideband) technology deployment in The U.S. and Europe.

 

Quarterly gross margin was 42.2% compared to 37.7% in the year-ago quarter. This reflects the aggressive cost cutting measures taken by management and favorable product-mix. Operating expenses, in the first quarter, were $78.6 million compared to $73.1 million in the prior-year quarter.

 

Total order backlog, at the end of the first quarter 2010 was $195.1 million compared to $155 million at the end of the prior-year quarter and $144.4 million at the end of the previous quarter. Book-to-bill ratio was 1.19 in the same quarter compared to 1.16 in the prior-year quarter and 0.92 in the previous quarter.

 

Arris generated $48.2 million cash from operation during the first quarter 2010 compared to $13.8 million in the prior-year quarter. Quarterly free cash flow (cash flow from operation less capital expenditure) was $43.6 million compared to $8.8 million in the year-ago quarter.

 

At the end of the first quarter 2010, Arris had $661.1 million of cash & marketable securities on its balance sheet compared to $625.6 million at the end of fiscal 2009. Total debt was $214.2 million at the end of the first quarter 2010 compared to $211.4 million at the end of fiscal 2009.

 

 

Quarterly revenue was $208.7 million, up 7.5% year-over-year. Quarterly gross margin was 45.4% in the reported quarter compared to 40.7% in the year-ago quarter. Arris has successfully upgraded its existing C4 CMTS line cards to DOCSIS 3.0 that received fabulous market acceptance together with its newly launched D5 Edge QAMs. Due to rapid growth of video traffic, downstream port shipment was 33,992 during the first quarter 2010.

 

 

Quarterly revenue was $42.2 million, down 1.9% year-over-year. However, quarterly gross margin was 23% compared to 21.6% in the year-ago quarter.

 

 

Quarterly revenue was $15.8 million, down 3.7% year-over-year. However, quarterly gross margin was 51.5% compared to 44.6% in the year-ago quarter.

 

 

Management has given a guidance that net sales in the second quarter 2010 will be within the range of $275 million – $295 million. EPS, on a GAAP basis is expected within the range of 14 cents to 18 cents. EPS, on a non-GAAP basis are expected within the range of 22 cents to 26 cents including stock-based compensation expenses of 2 cents per share.