Arris to buy Motorola’s TV set-top business from Google for $2.35 billion

Telecom Lead Asia: Arris Group will buy Motorola Mobility’s TV set-top business from Google for $2.35 billion.

Arris Group, a relatively small provider of high-speed Internet equipment, is looking to become a bigger player in the delivery of video with the acquisition of STB business from Google.

Arris CEO Bob Stanzione

STB shipment is likely to grow 15 percent to touch 250 million in 2012. Global Information Inc said demand for digital set-top box products is rising, particularly in Asia, Latin America, and a number of countries in Europe.

“This represents a great leap forward for Arris,” Arris CEO Bob Stanzione.

In 2011, Google bought Motorola Mobility in a $12.4 billion purchase. Google prized Motorola for its portfolio of more than 17,000 mobile patents. Google will retain Motorola’s smartphones and tablets business.

Digital video recorder pioneer TiVo is seeking billions of dollars in damages in a lawsuit alleging that Motorola’s boxes infringed on its patents. Those claims are scheduled to go to trial next year in federal court in Texas.

The proposed sale of Motorola’s set-top division calls for Google to receive $2.05 billion in cash and $300 million worth of Arris stock.

Arris said about 7,000 people work in Motorola’s set-top division.

In the past year ending in September, Motorola’s set-top operations generated $3.4 billion in revenue.  Arris Group revenue totaled $1.3 billion during the same period. Arris Group had earned $39 million through the nine months of last year after suffering a loss of nearly $13 million for all of 2011.

The market for set-top boxes faces significant challenges, particularly virtualization of the set-top box.

Cisco has reported 2 percent drop in set-top box (STB) revenue market in the second quarter from the previous quarter.

Despite the marginal drop in revenue market share in the global STB segment, Cisco took the worldwide set-top box revenue share lead from Motorola.

Meanwhile, satellite set-top boxes surged in Q2, with global shipments up 20 percent and revenue up 19 percent sequentially.

The biggest growth is coming from the Asia Pacific region, particularly China, but growth is also strong in Latin America and North America, where DirecTV and Dish Network are seeing sustained subscriber growth and renewed interest in higher-function STBs like Dish’s Hopper.

The global set-top box market, including cable, satellite, IP and hybrid IP/DTT, totaled $3.6 billion in 2Q12, up 4 percent sequentially.

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