ARRIS brings the idea of broadband home. The company makes communications equipment and components used to enable broadband voice and data transmission and to build television broadcast networks. Products include cable network headend gear, Internet protocol switching systems, modems, and other consumer premises products. It also sells such related hardware as cable, connectors, and other supplies used for mounting and installation. ARRIS primarily markets to large cable-network operators. In 2016, ARRIS acquired Pace, a telecom equipment maker based in the UK for $2.1 billion.
Change in Company Type
The Pace deal combines that company's hybrid fiber-coaxial and optics products with ARRIS's products. It also expands the geographic reach. With the acquisition, ARRIS shifted its country of incorporation to the UK. Called in inversion, the deal allows ARRIS to lower its tax bill in the US. The company remains headquartered in the US.
The company's organizational structure has two segments: network and cloud and customer premises equipment (CPE).
The network and cloud business makes equipment that telecommunications and cable companies get programming to customers. It accounts for 35% of sales. CPE makes the equipment that customers use to get programming. That includes set-top boxes and DSL and cable modems. It accounts for 65% of the revenue.
ARRIS runs its own factories and also outsources some manufacturing operations.
ARRIS's manufacturing operations are in Taipei, Taiwan; Tijuana, Mexico; and Manaus, Brazil. Its contract manufacturers are in Brazil, China, Thailand, Malaysia, Mexico, South Africa, and the US.
Sales and Marketing
ARRIS runs its own sales staff working in offices throughout the world. Value-added resellers also sell the company's products.
About 21% of the company's revenue comes from Comcast and another 14% comes from Time Warner Cable.
ARRIS's revenue dropped 10% in 2015 to $4.8 billion from $5.3 billion in 2014. The CPE unit's sales fell 15% in 2015 from 2014 because of new product introductions and platform transitions by some customers in 2014 that didn't which did not recur in 2015. What's more several customers reevaluated their video strategy. Broadband CPE products, however, rose.
Network & cloud results rose 1.5% driven by professional services while infrastructure sales diminished.
Cash flow from operations was $343.8 million in 2015, down from $459.8 million in 2014.
Mergers and Acquisitions
With the Pace deal, ARRIS looks to establish a global footprint for the combined company's products. ARRIS has room to grow, particularly in the Asia/Pacific region, which accounts for about 3% of revenue. Pace will not add to the Asia/Pacific sales right off the bat. In its last annual report Pace lump the region in with "Rest of World," which accounted for less than 2% of revenue. The companies also want to take advantage of research expertise in each company to develop new products.
The company made some job cuts after the merger became final. And in August 2016, the company appointed Bruce McClelland as CEO. The former CEO, Bob Stanzione, became executive chairman and continues as chairman of the board of directors.