NEW YORK—Arris Group Inc. forecast a disappointing second quarter due to weaker sales of voice-enabled cable modems, and analysts differed on the prospects for the communications technology company's stock Wednesday.
Arris cut its sales forecast, and said its quarterly profit could reach the low end of its previous outlook due to decreased demand for embedded multimedia terminal adapters, or EMTAs, and plant extension and installation equipment.
The Suwanee, Ga., company now expects between $278 million and $280 million in revenue, down from $288 million to $303 million. Its adjusted forecast calls for profit of 13 cents to 17 cents per share.
Analysts expect a profit of 16 cents per share on $294.8 million in revenue, on average, according to Thomson Financial.
Friedman Billings Ramsey analyst Brian Coyne said Time Warner Cable cut back on orders of EMTAs so it could clear inventory during the quarter. He trimmed his estimates and lowered his price target to $11 per share from $12, but kept an "Outperform" rating on the stock.
Coyne said demand for Arris' cable modem termination system products is strong, and he thinks those sales will push the stock higher in 2009.
Oppenheimer analyst Ittai Kidron said Arris has small customer base and small range of products, and the stock should trade at a large discount to its peers as a result. In a previous client note, he said expectations for the second quarter were too optimistic. Kidron rates the stock "Perform."
Arris shares have traded between $4.96 and $17.89 in the last year, and closed at $8.90 Tuesday. The company did not immediately return calls seeking comment.
