Market 'uncertainty' leads ARRIS to trim profit forecasts

DetailsEditor | 13 July 2015

Rather ironically given its recent spate of M&As, entertainment and communications solutions technology firm ARRIS has revised its Q2 profits in the face of market uncertainty caused by consolidation in the US cable industry.

ARRRISIn the updated guidance for the second quarter of 2015, ARRIS forecasts revenue in the region of $1.25-1.26 billon with GAAP net income per diluted share of $0.09-0.13.

In making its calculations, and with regard to accounting protocol, ARRIS noted that it may fail to realise fully expected benefits such as those arising from the acquisition of Pace, and that it may incur significant transaction costs and/or unknown liabilities. Yet it also specifically cautioned that the market in which it operates was 'volatile', adding that actions taken and contemplated may not achieve the desired impact relative to changing market conditions, and that the success of these strategies will be dependent on "effective implementation of those plans while minimising organisational disruption".

Such things include the termination of the previously proposed acquisition of Time Warner by Comcast, the subsequent announcement by Charter of its intent to acquire Time Warner and the other announced transactions within its customer base, including the proposed acquisition of DIRECTV by AT&T, the proposed acquisition by Frontier Communications of several properties owned by Verizon, and the proposed acquisition of Suddenlink by Altice, all of which may have an impact on customer's spending.

Commenting on the re-forecast, ARRIS chairman and CEO Bob Stanzione said: "The headwinds we faced in the second quarter were stronger than anticipated resulting in the update to our second quarter 2015 revenue and earnings guidance ... Our business continues to be impacted by external factors, most notably the various pending industry consolidations and by the strengthening of the US dollar. At this point, we anticipate that these factors will continue to impact us in the second half of 2015. We expect the Pace plc acquisition to help counter some of these industry conditions as a result of anticipated synergies and a more diversified customer base and product portfolio."