Arris Plunges on Downgrade

A brokerage sees earnings "uncertainties" going forward.
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Broadband and high speed data provider

Arris Group

(ARRS) - Get Report

was downgraded from buy to neutral by SunTrust Robinson Humphrey after the company said fourth quarter earnings will be lower, citing "uncertainties" surrounding the pending Comcast/AT&T Broadband merger. Shares were down 26%.

Recently, shares were at $1.92, down 70 cents, on the news.

"In light of possible disruptions in purchasing by the new Comcast/AT&T Broadband, we anticipate that revenues and earnings for the fourth quarter of 2002 and into 2003 will be significantly lower," the company said in a press release, but it did not provide specific forecasts. The company does anticipate a positive cash flow.

On Thursday, the Dulth, Ga.-based company announced its third-quarter earnings. After certain items, the company earned $3.5 million, or 4 cents a share, compared with a loss of $40.7 million, or 50 cents a share, a year earlier.

Before certain items, the company lost $100,000, or breakeven on a per-share basis, compared with earnings of $800,000, or a penny a share, a year ago. On a "cash" basis, the company earned 10 cents a share, or 15 cents a share excluding items.

Revenue was $197.6 million, compared with $194.1 million a year ago. The company said cable telephony and data products were strong.