Arris Enhances IP Video Portfolio - Analyst Blog

Arris Group Inc. ARRS has further strengthened its industry-leading IP video delivery platform. Recently, the company acquired Ontario-based SeaWell Networks, a leading developer of adaptive bit rate ABR streaming technologies. However, the financial terms of the deal are yet to be disclosed.

This was the first major takeover of Arris after its acquisition of the set-top box business of Motorola Mobility. Seawell boasts a powerful portfolio offering IP video, multiscreen video, and ad insertion solutions.

In Oct 2013, the two companies had collaborated to introduce integrated solutions to monetize multiscreen opportunities. The multiscreen advertising solution integrates SeaWell's Spectrum IP session delivery controller technology with Arris's SkyVision ad insertion platform. 

Arris has restructured its business model into three reporting segments, namely, network and cloud division, customer premises equipment group and strategy and converged services unit. SeaWell's ABR solutions will be integrated into Arris' network and cloud division.

Arris expects the acquisition of SeaWell to enhance its offerings through accelerated delivery of the personalized TV and advertising solutions, streamlined video distribution across verious devices and minimization of costs of multiple IP streaming platforms for multiple devices.

We believe that the strengthening of the IP video delivery platform is very crucial for Arris for its future growth prospects. Just a month ago, The Wall Street Journal reported that IT giant Apple Inc. AAPL is negotiating with Comcast Corp. CMCSA to offer a cloud-based TV streaming service using Apple's own set-top box. Earlier, Apple discussed a similar deal with Time Warner Cable Inc. TWC, which failed to materialize.

Comcast and Time Warner Cable are the two major customers of Arris. In the fourth quarter of 2103, the two companies together constituted over 25.5% of the total revenue of the company. Therefore, loss of any of these clients will considerably affect the top line of the cable TV infrastructure vendor. Arris currently has a Zacks Rank #3 (Hold).