Because at the end of the day, set-top revenue may be good, but margins stink.
Arris isn’t giving up on set-tops, but it doesn’t want to live and die by them either.
Video customer premises equipment contributes 45% of overall revenue to the Arris Group Inc. (Nasdaq: ARRS) business. Yet according to Raymond James analyst Simon Leopold’s calculations, set-tops deliver only around 10% of the company’s operating income. That’s a massive disconnect on the margin front, and it shows just how much scale Arris needs to make any kind of profit on in-home video hardware.