With a chunk of Arris’ revenue coming from customer premises equipment (CPE), namely cable gateways and set-top boxes, RBC Capital Markets analyst Mitch Steves thinks the equipment vendor could use Ruckus to sell wireless LAN (WLAN) equipment to its installed customer base. Brocade’s switches and routers, meanwhile, would provide product diversity beyond CPE.
Based on Brocade’s IP revenues — about $1 billion per year, evenly split between Ruckus and the rest of the business — Steves thinks that a $2.2 billion price is fair. That would be $1.25 billion for Ruckus and $950 million for the switching and routing, he specifies in a research note published today.
Steves admits Arris is a “dark horse.” Juniper, Cisco, IBM, Huawei, Lenovo, Dell, and Alcatel Lucent Enterprise are more likely candidates and might have already considered Ruckus previously, RBC analyst Amit Daryanani writes in a separate note today.
Earlier this month, Broadcom announced that it will acquire Brocade for $5.9 billion. Broadcom plans to hold onto Brocade’s Fibre Channel storage area networking (SAN) business, but made it very clear that it wants to divest Brocade’s IP networking business, which includes Ruckus.