ARRIS Group Inc. recently acquired Ruckus Wireless for $800 million, but promised to keep the Wi-Fi equipment manufacturer’s name and leadership team, RCR Wireless News reports. Former Ruckus president Dan Rabinovitsj will become president of ARRIS enterprise networks, which will include Ruckus.
“Our team is jubilant, relieved and ready to hit the ground running,” Rabinovitsj wrote in a blog post. “We will operate as a business unit with its own engineering, sales and marketing resources focused on the enterprise market.”
Ruckus will maintain its independence, but won’t be on an island within ARRIS, according Rabinovitsj. He believes the benefit of being part of a larger company, “will become manifest in manufacturing, operations and supply chain, but also in research and development where we will be able to tap into complementary skill sets and know-how from DOCSIS to Wi-Fi, Ethernet and Optical communications.”
The ability to combine its technologies that target home and enterprise markets is one of the biggest perks of working as a joint company, Rabinovitsj said. Home Wi-Fi users are enjoying the high-density mesh networks already along with voice control and other Internet of Things (IoT) applications.
Ruckus now looks forward to bring these technologies to its enterprise customers. Meanwhile, there’s an expectation home users will purchase products and services that provide the same performance levels that exist in today’s enterprise environments.
One of the biggest opportunities for the combined company is the integration of technologies that target the home and enterprise markets, Rabinovitsj said. Home Wi-Fi users are already enjoying high density mesh networks, as well as voice control and other IoT applications, and Ruckus looks forward to bringing these technologies to enterprise customers. On the flip side, home users are expected to invest in products and services that offer the performance levels seen today in enterprise environments.
ARRIS stock dropped when the company agreed to the acquisition, but has picked up during the last few months and is inching closer to where shares were before the announcement. Raymond James analyst Simon Leopold strongly recommends buying ARRIS and believes its undervalued due to investors’ misunderstanding of ARRIS’ and Ruckus’ business mix.
“We believe ARRIS’ stock reflects related misconceptions that its sales are largely based on Set Top Boxes (STB), STB sales are disappearing, and overall sales will follow STB down,” wrote Leopold. “Management has disclosed STB contributions at 45% of 2016 sales and we forecast a drop to 35% in 2018. We believe overall sales remain relatively flat in 2018, with profitability supported by growth from higher margin products (CCAP/CMTS, Transmission, and Broadband).”
“We believe Ruckus can be a transformational acquisition that will help return ARRIS to organic growth,” BTIG Research managing director Walter Piecyk told Connected Real Estate magazine.