The Zacks Analyst Blog Highlights: Arris Group, Google, Comcast, TiVo and ONEOK
CHICAGO, April 18, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Arris Group Inc. (Nasdaq: ARRS), Google Inc. (Nasdaq: GOOG), Comcast Corporation (Nasdaq: CMCSA), TiVo Inc. (Nasdaq: TIVO) and ONEOK Inc. (NYSE: OKE).
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Here are highlights from Wednesday's Analyst Blog:
Arris Cleared to Buy Google Unit
Arris Group Inc. (Nasdaq: ARRS), a cable equipment manufacturer, announced that it has got the legal clearance to acquire Motorola mobility's Home business. Motorola Mobility is a subsidiary of search engine giant, Google Inc. (Nasdaq: GOOG).
Clearing the regulatory hurdle of U.S. Department of Justice, Arris can now go ahead with its proposed $2.35 billion bid to acquire Motorola Home, which will make it one of the dominant players in the set-top box (STB) market. The acquisition is expected to close on Apr 17, 2013.
In Dec 2012, Arris decided to acquire the STB and other related businesses of Motorola Mobility for around $2.35 billion. Arris will pay $2.05 billion in cash, raised through debt financing and $150 million in newly-issued shares of the company, which in turn will give Google a 7.85% stake in Arris.
For the remaining $150 million, Arris will issue 10.6 million shares to Motorola Home customer Comcast Corporation (Nasdaq: CMCSA). Although this move will reduce the Arris equity stake that Google was supposed to receive, its cash position will increase by $150 million.
As part of the transaction, Arris will get access to 2,000 patents including video conferencing and digital rights management of Motorola. Arris will also acquire the right to license additional intellectual property from the handset manufacturer. However, Motorola's patent-infringement litigation with TiVo Inc. (Nasdaq: TIVO) remains a matter of concern for Arris.
The acquisition will considerably boost Arris' topline and will generate more than $100 million in cost synergies. However, Arris' shareholders did not react positively to the news as the stock slumped almost 5% during the day trade in Nasdaq on Apr 15.
Research firm, Synergy Research Group, stated that the Arris/Motorola tie-up may pose serious competitive pressure on Cisco System, the undisputed leader in CMTS (cable modem transmission system). We believe that acquiring the STB unit is a positive for Arris as it will have access to Motorola's wider market and expanded customer base.
Currently, Arris carries a Zacks Rank #3 (Hold).
ONEOK Hits 52-Week High
Shares of ONEOK Inc. (NYSE: OKE) climbed to their 52-week high of $50.02 driven by completion of three important organic projects and strong fourth-quarter and full-year 2012 results. The strong results were driven by higher natural gas and natural gas liquids (NGL) volumes and lower operating costs. We expect the company's long-term earnings growth to be 13.83%.
ONEOK Inc. continues to invest in several growth projects and spent $1.9 billion in 2012. The company had a cash balance of $583.6 million as of Dec 31, 2012 and cash from operating activities of $1 billion in 2012. In addition, $380.9 million remains available under the $1.2 billion credit facility. This financial position will enable ONEOK Inc. to pursue steady organic growth strategies and spend $4.7-$5.3 billion through 2015 on several projects.
Apart from investment in internal growth projects, its strong financial position also allows ONEOK Inc. to enhance shareholder value through share repurchases and regular dividend payments.
In 2012, the company repurchased shares worth $150 million under its $750 million 3-year share repurchase program. To date, the company has bought back shares worth $450 million. It can further repurchase shares worth $300 million in 2013.
In Feb 2013, the board of directors of ONEOK Inc. increased its quarterly dividend by 9% to 36 cents per share. The company's practice of raising dividends from time to time will benefit the stock as it attracts investor attention.
ONEOK Inc.'s full-year 2013 net income guidance is in the range of $350 million to $400 million. In 2012, the company's net income was $360.6 million. The Zacks Consensus Estimates for full-year 2013 and 2014 are $1.78 and $2.21 per share, up 8.84% and 23.88% year over year, respectively.
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