US communications solutions company Arris (Nasdaq: ARRS) is shutting down its activity in Israel and laying off the 100 employees at its branch in Ramat Hahayal, Tel Aviv, sources inform "Globes". Some of the employees will receive dismissal notices in the next few days, while the remainder will remain with the company until July 2016 in order to complete the last remaining commitments and to assist in the closure process.
Besides the activity in Israel, the company will shut down additional sites around the world in a move to streamline and to cut areas of activity that are not part of the core business, or because of changes taking place in the telecommunications market. The Israeli center is responsible for development of traditional video transmission solutions. Among its main customers in Israel is HOT Telecommunication Systems Ltd. (TASE: HOT).
The Israeli team mainly focuses on development of and support for VOD (video on demand) solutions, broadband video transmission, and CMTS (cable modem termination system).
Arris, which has a $4.4 billion market cap, is based in Suwanee, Georgia, and employs about 8,000 people worldwide.
Arris confirmed the report, and told "Globes": "Our video systems unit is changing its business focus in response to the switch by its customers - global service providers - from traditional video provision to IP and OTT. Our Tel Aviv development center mainly focuses on traditional video distribution technology.
"The closure of the activity in Israel is very regrettable and hard, but it is strategically necessary for the company in accordance with the demand for our products on the part of our customers around the world and the changes mentioned in the telecommunications market. We understand the difficulty for the employees in Israel and we are committed to helping them to deal with this tough decision."
Arris will continue from a distance to support the services it provides to its customers in Israel. The company says Israel continues to be an important market for it. It refused to disclose how much the closure of the Israeli branch would save, and only said that "the move will help the company maintain the position from which it will be able to compete in the market in the long term."
In 2011, Arris bought Israeli company BigBand for $172 million and turned it into its Israel development center with 160 workers, after laying off some workers, including the management, following the acquisition. In 2012, Arris bought the Motorola Home division from Google for $2.35 billion, and the duplication of functions led to further layoffs in Israel.
A few days ago, Arris released its 2015 results, missing the analysts' estimates, while its guidance also disappointed. Arris posted an 84% drop in non-GAAP earnings in comparison with the previous year to $0.62 per share ($92.2 million in total). Revenue fell 13% to $4.8 billion. For the first quarter of 2016 the company sees earnings per share of $0.37-0.42 and revenue of $1.56-1.61, below previous market estimates.
Published by Globes [online], Israel business news - www.globes-online.com - on February 23, 2016
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