Arris International PLC (ARRS)

(21 October 2016)

ARRS Business Summary

ARRIS International develops equipment and software for cable system operators and other broadband service providers that allow these clients to deliver a full range of integrated voice, video and data services to subscribers

ARRS Fundamentals

• Price to Earnings: N/A
• Earnings Per Share: $0.35
• Market Cap: 4.3B
• Current Ratio: 1.69
• Return on Equity: -2.65%
• Dividend Yield: 0.00%
• Total Debt to Equity Ratio: 78.20

Balance Sheet ($ in Thousands)

• Total Assets increased $3,016,337.
• Total Liabilities increased $1,853,448.
• Total Stockholder Equity increased $1,162,889.

Income Statement ($ in Thousands)

• Net Sales for Six Months Ended increased $869,516.
• Gross Margin increased $127,849.
• Operating Income decreased $150,362, to (53,102).
  • Mainly due to increased R&D Spending as well as Amortization of intangible assets.
• Net income attributable to ARRS resulted in loss of (118,345) for Six Months Ended.

Cash Flow Statement ($ in Thousands)

• Net Cash provided by operating activities increased $29,636.
• Net Cash used in investing activities increased $253,290.
• Net Cash provided by financing activities increased $305,915.
• Cash and Cash Equivalents at end of period increased $380,053.

Highlights from 10-Q

• ARRIS and Charter to collaborate on WorldBox 2.0 development and deployment.
  • ARRIS to be a key participant in the development of WorldBox 2.0, Charter’s next-generation video platform to be deployed on traditional television sets across Charter’s footprint.
  • WorldBox is a hybrid IP/QAM video platform that enables traditional and cloud-based user interfaces, content, and new video features to Charter subscribers. Worldbox 2.0 expands on Charter’s current downloadable conditional access (“DCAS”) capabilities, enhancing legacy hardware-based CAS systems across Charter’s new footprint, allowing for faster and even more cost-effective deployment. This is made possible through the built-in security processing capabilities now available in generic chipsets. Worldbox 2.0 also adds more advanced graphics capabilities and processing power, leveraging the ever-growing capabilities of today’s chipsets.
• ARRIS International plc (NASDAQ: ARRS) announced today that it expanded its leading portfolio of DOCSIS 3.1 devices—including, modems, broadband gateways, and telephony gateways—to anticipate the needs of its increasingly diverse global customer base. It also launched its Touchstone Development Partner Program, enabling partners to enhance the subscriber experience on the tens of millions of Touchstone devices shipped each year.
  • The new ARRIS TG3442 offers gigabit broadband speeds and delivers whole-home video over Wi-Fi at an entry-level price point.
  • The performance-tier TG3452 telephony gateway increases performance for supporting even faster speeds and carrier-grade video over Wi-Fi services.
  • And the premium-tier TG3462 telephony gateway adds multiple IoT radios and 8×8 Wi-Fi to deliver the fastest-possible speeds and best connectivity for next-generation connected-home services

Sentiment

• Extremely overvalued, trading at nearly 300 times earnings.
• Would love to short this company at these current levels. Although revenues and margins increased, the company found a way to take in negative incomes for the most recent quarter. Doesn’t make sense. Would sell short at these levels.