Arris Slips To Loss In Q2, But Results Beat View

(RTTNews) - Video and broadband equipment maker Arris Group, Inc. (ARRS) on Wednesday reported a loss for the second quarter as higher restructuring charges and operating expenses offset a surge in revenues that were helped by the acquisition of Motorola Home.

However, both revenue and adjusted earnings per share beat analysts' expectations. Looking ahead, the company forecast earnings for the third quarter in line with Street estimates. Arris' shares gained more than 6 percent in extended trades.

The Georgia-based company's second-quarter net loss was $50.28 million or $0.37 per share, compared to net income of $15.00 million or $0.13 per share in the year-ago period.

Arris noted that its acquisition of Motorola Home, which was closed on April 17, 2013, would significantly impact comparisons to prior periods.

In December 2012, Arris Group said it agreed to acquire Google Inc.'s (GOOG) Motorola Home business, TV set-top box maker, for $2.35 billion in a cash-and-stock deal. Google brought Motorola Home business into its fold when it wrapped up Motorola Mobility for $9.8 billion in May 2012.

Arris' adjusted net income for the quarter was $0.46 per share, compared to $0.25 per share in the previous-year quarter. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter almost tripled to $1.00 billion from $349.33 million in the same period last year. Analysts had a consensus revenue estimate of $975.57 million for the quarter.

Arris estimates that prior to the close of the acquisition, Motorola Home recorded about $66 million of revenue in the second quarter.

Total operating expenses for the quarter rose to $320.95 million from $91.60 million in the same period last year and include a surge in restructuring charges as well as amortization of intangible assets.

Order backlog at the end of the quarter was $534.9 million, compared to $251.9 million at the end of the prior-year period.

Looking ahead to the third quarter, Arris forecasts revenues in a range of $1.05 billion to $1.08 billion, with adjusted net income per share in range of $0.32 to $0.37 per share and reported net loss in a range of $0.07 to $0.12 per share.

Analysts expect the company to report earnings of $0.34 per share for the quarter on revenues of $1.11 billion.

Arris said it has settled certain litigation matters with Google, for which the company's maximum liability is $50 million under the terms of the acquisition agreement. Arris anticipates paying the litigation settlement in the third quarter of 2013.

ARRS closed Wednesday's regular trading session at $15.62, up $0.31 or 2.02 percent on a volume of 1.72 million shares. In after-hours, the stock further gained $1.03 or 6.59 percent to $16.65.