Technology

Motorola, Arris Sales Falter

5/02/2009 2:00 AM Eastern

Motorola and Arris Group were pinched by stingier capital spending among cable operators in the first quarter.

Both technology suppliers reported declines in revenue for the first three months of 2009, although they also anticipated stronger sales for the second quarter of the year.

Unaudited sales in Motorola’s Home cable and video group were down 12% in the first quarter, to slightly more than $1 billion. For the quarter ended April 4, the unit posted a single-digit decline in set-tops sales and a double-digit decline in headend and infrastructure equipment sales, according to Greg Brown, president and co-CEO of Motorola and CEO of Broadband Mobility Solutions.

“While industry fundamentals for the Home business remain strong, tough economic conditions continued to contribute to lower industry capex spending, including inventory contraction in the first quarter,” Brown said on a conference call last Thursday with investors.

Motorola’s Home group closed out 2008 strongly. Fourth-quarter sales for the cable unit were approximately $1.2 billion, up 11% year-over-year. For the full year, Home grew sales 16% shipping 18 million set-tops compared with 15 million in 2007.

Meanwhile, Arris’s unaudited first-quarter 2009 revenue declined 7.3% from the year-ago period, in line with previously announced expectations, to $253.5 million. The company previously cited the broad economic slowdown for the weaker sales and noted that Comcast, its single biggest customer, “took a breather” on DOCSIS 3.0 network deployments in the first quarter. Unaudited net income for the quarter more than tripled, to $12.9 million compared with $3.8 million during the first quarter of 2008.

Arris projected second-quarter 2009 revenue will be $270 million to $290 million. Chairman and CEO Bob Stanzione said in a statement that he had “cautious optimism that our business will gain momentum in the second quarter and beyond.”

Brown said sales for Motorola’s Home unit in the second quarter are anticipated to be down year on year but up slightly sequentially. For the year, the company expects the addressable market for the Home business to be down compared with last year.

Overall, for the first quarter, Motorola reported sales of $5.4 billion — down 28% from the year-ago period — while net loss from continuing operations was $291 million, versus $194 million in the first quarter of 2008.

September