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Ruckus outlines new vision as part of ARRIS

ARRIS has completed its $800 million dollar purchase of Ruckus Wireless with a promise to retain the Wi-Fi equipment maker’s name and leadership. Former Ruckus president Dan Rabinovitsj will become president of ARRIS enterprise networks, which will include Ruckus.

“Our team is jubilant, relieved and ready to hit the ground running,” Rabinovitsj wrote in a blog post. “We will operate as a business unit with its own engineering, sales and marketing resources focused on the enterprise market.”

Despite its independence, Ruckus will not be an “island” within ARRIS, Rabinovitsj said. He said the advantages of being part of a larger company “will become manifest in manufacturing, operations and supply chain but also in R&D where we will be able to tap into complementary skill sets and know-how from DOCSIS to Wi-Fi, Ethernet and optical communications.”

One of the biggest opportunities for the combined company is the integration of technologies that target the home and enterprise markets, Rabinovitsj said. Home Wi-Fi users are already enjoying high density mesh networks, as well as voice control and other IoT applications, and Ruckus looks forward to bringing these technologies to enterprise customers. On the flip side, home users are expected to invest in products and services that offer the performance levels seen today in enterprise environments.

Good news for ARRIS shareholders?
ARRIS shares tumbled when the company agreed to buy Ruckus, but have been trending higher over the last several months, and are now trading close to their pre-announcement level. Analyst Simon Leopold of Raymond James has a strong buy recommendation on ARRIS, and believes it is undervalued because investors misunderstand its business mix.

“We believe ARRIS’ stock reflects related misconceptions that: 1) Its sales are largely based on Set Top Boxes (STB), 2) STB sales are disappearing, and 3) Overall sales will follow STB down,” wrote Leopold. “Management has disclosed STB contributions at 45% of 2016 sales and we forecast a drop to 35% in 2018. We believe overall sales remain relatively flat in 2018, with profitability supported by growth from higher margin products (CCAP/CMTS, Transmission, and Broadband).”

ABOUT AUTHOR

Martha DeGrasse
Martha DeGrassehttp://www.nbreports.com
Martha DeGrasse is the publisher of Network Builder Reports (nbreports.com). At RCR, Martha authored more than 20 in-depth feature reports and more than 2,400 news articles. She also created the Mobile Minute and the 5 Things to Know Today series. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York and managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Martha is the board president of Austin's Trinity Center and is a member of the Women's Wireless Leadership Forum.

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