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Arris Outlines the Digital Broadcasting Future

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In a special free report, some of my Foolish colleagues identify Arris Group (Nasdaq: ARRS  ) as the top stock for 2011. (Go ahead and grab a copy while I wait -- it's free!)

So far, so good. It's only mid-February, and Arris shares have gained a market-stomping 22%. Still, with the stock approaching the upper bounds of the price target set for it months ago, is there gas left in this company's growth engine?

Last week's fourth-quarter report certainly didn't hurt any. The maker of broadband equipment beat analyst estimates on both the top and bottom lines, and issued mildly optimistic guidance for an encore. Non-GAAP earnings fell 40% to $0.19 per share on 11% lower revenue, which may sound like bad news until you consider that both Time Warner Cable (NYSE: TWC  ) and Comcast (Nasdaq: CMCSA  ) rolled out next-generation cable equipment in 2009. It was a tough comparison.

Arris is making up for those sorely missed revenue streams by diversifying worldwide. Cable communications is a tough market where Cisco Systems (Nasdaq: CSCO  ) has reported some trouble recently and Chinese manufacturers are rising, led by Huawei. But Arris is a longtime leader in certain segments of the field and doesn't expect to lose that throne anytime soon.

You may have noticed that I see the future of entertainment as all digital, all the time. Arris is on board with that vision and is excited about the sales prospects for a "game-changing" home network gateway that paves the way for an all-IP broadcasting future. There are already orders for this product on the books, and three customers have committed to buying this networking gateway. Preach it, brother!

You don't need robotic eyes to see that the future is written in ones and zeroes and that Arris owns an important piece of that puzzle. For more details, I'd refer you back to that free report again.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2011, at 11:04 PM, AJfool22 wrote:

    This is actually my first post. I saw the 2011 Top Stock for ARRS Group and started doing a little looking around. I saw this from the 2/13/11. I don't know how to evaluate all the financials yet but is it just me or it's a bad sign when everyone in charge sells?

    "....Chairman & CEO Robert J Stanzione sold 265,000 shares of ARRS stock on 02/11/2011 at the average price of 13.67. CFO/Executive Vice President David Potts sold 150,276 shares of ARRS stock in November and February. President MCS Bryant Isaacs, Treasurer Marc S Geraci, President of Access, Transport John O Caezza, EVP/Strategic Pl, Chief Couns. Lawrence A Margolis, and President, Adv Tech & Services James Lakin sold 263,922 shares of ARRS stock in February."

  • Report this Comment On February 15, 2011, at 11:08 PM, OliFire wrote:

    Let me say that I am very new to this Foolish game. I read the report and have decided to watch ARRS... My notes say that the sell point should be between 12-14/ position. I still believe in this company and the leadership they have in place, but is it still a good buy if it's already at 13.5? I do not have the knowledge to evaluate the financials to determine this.

  • Report this Comment On March 07, 2011, at 1:58 PM, jetamerica wrote:

    I agree with Byblos. When the top management bail out wholesale in February 11, 2011 it sends me a very negative message. The aggregate he mentioned is almost 700,000 shares and they retain less than that number. Remember, almost all owned by institions and less than 1% by insiders. That shows very little loyalty also

    Does not sound like a management group that has confidence in its company future. I may retain a small position only

  • Report this Comment On April 09, 2011, at 12:49 PM, joshkate wrote:

    Come-on David. Seems like your saying this is a buy, but top exec are selling? What's the real story? TH

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