Arris’ fourth-quarter performance improves

Things are looking up for telecommunications vendor Arris, as both domestic and international operators show growing interest in cable telephony products--including end-to-end voice-over-IP, company officials said during a fourth-quarter/year-end earnings conference.

Fourth-quarter revenues of $183.5 million were 5.4% better than third-quarter results and 3.3% better than the fourth-quarter of 2000. In particular, broadband revenues of $109.8 million were up $22.2 million from the third quarter and international revenues of $47.8 million were up $16.4 million, or 52%, from the third quarter, based on strong international demand for cable telephony products.

The company reported a loss of $13.6 million, or 18 cents per share, compared with $6.5 million, or 17 cents per share, a year earlier based largely on the costs around the acquisition of cable modem termination system developer Cadant. That transaction closed Jan. 8.

Overall, the company met its goal to reach profitability in early 2002, “reporting a small cash profit for the quarter,” said Bob Stanzione, president and CEO.

Stanzione expressed surprise at the gains in the company’s broadband sector, calling it “one of our best quarters ever” and attributing it to upticks in both international and domestic business--especially for telephony products.

“Our opportunities for growth worldwide are outstanding,” Stanzione said. “In the short run, we expect increased sales in infrastructure products as plant construction rebounds early in the year.”

Longer term, he said, the international market should grow “driven by increasing demand for bandwidth in the last mile. We also expect that over the next 12 months or so we’ll see several new large entrants into the telephony business.”

Domestically, Stanzione said Comcast’s bid to acquire AT&T Broadband was “a great outcome for us.” Arris already depends heavily on AT&T for its broadband telephony business, and Comcast “stated support for this strategy that should signal the continuing expansion of the Cornerstone voice deployments and provide a large opportunity to expand the telephony footprint into the Comcast territories.”

While AT&T and another Arris customer, Cox Communications, use constant bit-rate telephony transmission, the company is also developing an end-to-end voice-over-IP platform, which Comcast is trialing in Detroit, Stanzione said.

Both Charter Communications and Adelphia Communications have been in trials with Arris’ VoIP technology, said Jim Lakin, president of Arris’ broadband group.

“Adelphia is the longest running trial,” he said, using a gateway system with a Class 5 switch in the backbone moving to local VoIP. “Charter has gone from a lab trial to a trial that has friendlies on it and actually has some product in the field.”

Another top MSO, AOL Time Warner, is “serious about their entry into voice-over-IP, and we’ve hade a number of discussions with them about that,” said Stanzione, who declined to go further into Arris’ prospects.