Arris reported a 12.7 percent decline in fourth quarter revenue to $1.1 billion, with sales suffering because of sluggish telco TV business and an overall slowdown in operator orders for CPE.
"As AT&T (NYSE: T) has reported, they're moving away from U-verse. And as a result, our sales of U-verse video equipment have bottomed out," said Arris Chairman and CEO Bob Stanzione in Wednesday's investor call.
Arris's downer of a vendor experience with U-verse comes as the AT&T service shed 240,000 video customers in the fourth quarter. Bloomberg reported earlier this week that AT&T is no longer even ordering U-verse set-tops, as it migrates its video customer base to DirecTV.
Overall, CPE sales declined 20 percent year-over-year, with unit sales of video set-tops dropping 13 percent.
Arris reported international sales of $357 for the quarter, which represented 32 percent of overall sales. This was despite the continuing problem of the strong American dollar, which Stanzione said is dragging the company's revenue down, particularly in areas like Latin America.
"We believe the demand is there," he said "Customers continue to want higher speed broadband services in these regions."
Happily, Stanzione noted the strong fourth-quarter performance of Arris' cable partners — and their indications for ample capital spending in 2016.
Despite the movement away from U-verse, Stanzione said AT&T's investment into DirecTV should generate more business for Arris in the coming months.
He was also bullish on DOCSIS 3.1 sales. "We're fortunate to have both ends of DOCSIS 3.1 — the network and the CPE end," he said.
Arris' cloud business reported its strongest sales of the year. And Stanzione said a number of integration aspects for the company's recently closed acquisition of No. 2 competitor Pace have been "substantially completed."
"We see a number of signs the business will pick up," he said.
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