ARRIS Company Overview

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ARRIS Company Overview
A leading provider of High Speed Data and IP
Telephony Solutions for the Cable Market
Broadband
Supplies CPE

• ARRIS C3 and C4 CMTS Voice and Data CMTS
  Systems
• ARRIS D5 Universal Edge QAM Video Headend
  Equipment (NextGen Edge QAM)
• Cornerstone Circuit Switched Cable Telephony

• Touchstone Cable IP Telephony CPE (E-MTA)
• TeleWire Infrastructure Products and Supplies
  for Cable Networks

LTM June 2007 Revenue - 951 million
812 Employees
Customers
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ARRIS Product Overview
ARRIS Products
Market Requirements
Product Category

• Reliability
• Standards Compliance
• Guaranteed Quality of Service
• Hitless Software Upgrades

• High Speed Data

CADANT
C3 CMTS
BROADBAND
C4 CMTS/M-CMTS

• Video (Edge QAM)

• High Density
• DOCSIS 3.0 Compliant
• Interoperability
• Future Proof (M-CMTS)

KEYSTONE
D5 Edge QAM/M-CMTS
TOUCHSTONE

• Voice over IP

• Standards Compliance
• High Reliability and Availability
• Multi-protocol support (NCS/SIP)
• Technology/Price Leadership

CPE
TM402
TM508/512
TM502
TELEWIRE
Regal Coaxial Cable Splitters

• TeleWire Supply

• Direct to Subscriber
• Expedited Installation
• Business to Consumer Web Store

Digicon F-connectors
3
ARRIS Company Overview
Source Infonetics, Broadband CPE and Subscribers
Quarterly Worldwide Market Share and Forecasts
for 2Q07
Source Infonetics, CMTS Hardware and
Subscribers, Quarterly Worldwide Market Report
for Q207
4
ARRIS Major Customers
Customer
ARRIS Revenue(mm) / ( of total sales)
ARRIS Position
LTM (June 2007)
2005
2006
EMTA
CMTS
163.324
345.538.8
389.5 40.9
1
?
?
62.96.6
116.717.2
87.99.9
2
?
?
3
104.415.3
80.89.1
?
?
88.1 9.3
72.310.6
83.09.3
4
?
?
Source ARRIS 1 Chassis-based CMTS 2 CMTS for
hospitality market 3 C3 and C4 CMTS 4 Announced
first C4 CMTS contract on August 9, 2006
?
?
No. 1 Supplier
Supplier
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Introduction to C-COR

• Founded in 1953
• Approximately 1,300 employees
• Traded on Nasdaq (1981) - CCBL
• Home page at www.c-cor.com
• Global HQ State College, PA
• Operational Installed product base over 3.5
  Billion
• Over 300 deployed software systems

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C-CORs Complementary Product Lines
C-COR Broadband Access
C-COR OSS
C-COR On Demand

• Policy Management
• Service Assurance
• Mobile Workforce

• On Demand
• Digital Ad Insertion
• Content Management

• Fiber Optic Transmission
• RF Electronics
• Business Services Managed Access

Network Services
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Combination Rationale
Strengthens our position as the leading pure play
cable solutions provider
Expands addressable market and enhances video
growth opportunities
Provides significant portfolio expansion
Revenue diversification across core MSO
relationships
Enhances financial profile margin expansion
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A Complementary Combination of Cable Solutions
Providers

• Market leader in Cable IP Telephony with over 45
  market share
• 2 player in worldwide CMTS Ports with over 25
  market share
• Strong growth opportunities with Next Generation
  Edge QAM rollout and Switched Video

• Uniquely positioned to deliver unified video
  systems (VoD, Ad Insertion, Switch Digital Video)
• A leading player in the Access and Transport
  segment
• 3.5 billion cable optical transport and access
  installed base

Complementary Research and Development
ARRIS Telephony, High Speed Data, Video
Modulation
C-COR RF, Switched Video, Ad Insertion, OSS
Optics
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Creates Leading Pure Play Cable Solutions Player
CY2006 Revenues (mm)
Ability to compete against larger competitors
through scale and differentiates combined company
from smaller market players
1,128
248
177
161
68
Harmonic
BigBand
SeaChange
Concurrent
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Combination Leverages Technology Competencies
Across Platforms to Deliver Value to Our Customers
Expanding Technology Base
Delivering Robust Application Set
Driving Higher Levels of Integration
Expanded Market Opportunity
Switched Digital Video
CMTS
EMTA
PCMM / SRM / ERM
Digital Video
Optical RF
VOD / Ad Server
OSS
DOCSIS 3.0
CMTS
EQAM
EMTA
High Speed Data Services
EQAM
PCMM/ SRM / ERM
HFC Access
Converged IP/HFC Networking
Cross Product Platforms
Digital Voice
OSS
VOD / Ad Server
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Capturing Growth Opportunities
Growth Strategy
Ultimate Goal
Combined Products

• Unified video platform Broadcast, Switched
  Video, VOD
• Leadership in Switched Digital Video and Network
  PVR
• Dynamic Advertising (insertion and interactivity)

On Demand
Generating Growth and Producing Higher
Margins Integrated Cross Platform Triple Play
Offerings Robust Reliable Cable Solutions
Provider

• Converged OSS Suite Integrated modular offering
  addressing Service Assurance and Workforce
  Management
• Manage network resources via Policy and QoS

OSS

• Forward compatibility to DOCSIS 3.0
• M-CMTS/DOCSIS 3.0 Leadership
• Wideband Data Leadership

CMTS

• Highly reliable, cost effective HD and VoD
  modulation
• Open interface Switched Digital Video (SDV)
• Deployable as Universal Edge QAM application
  (M-CMTS)

Edge QAM

• Move into multi-line EMTA and business services
• Continue to reduce costs
• International growth

EMTA

• Leverage installed base with regional product
  offerings
• End-to-end offering for 1GHz
• IP Video Transport/Processing
• Optimize network capacity

Access, Transport Supplies
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Extensive Global Customer Base
13
Product and Revenue Diversification

LTMRevenueThrough June 2007, byProduct
Line()1
LTMRevenue Through June 2007,byCustomer()1
Note 1. Unaudited figures
Total Revenue 277
Total Revenue 951
Total Revenue 1,229
Complementary strengths within major MSO accounts
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Portfolio Management
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Have you ever asked these questions as a manager,
employee, executive, or shareholder?

• Are we choosing the right projects?
• The list of potential projects is a mile long and
  we dont have resources to execute them. How do
  we know which ones to choose?
• How do we most effectively invest our RD
  resources to maximize our return on investment?
• Do our RD investments match our company
  strategy? Do they provide balance?
• Do we have the right mix of risk versus return,
  maintenance versus growth, and short term versus
  long term?

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• The product decisions a company makes today
  determines the product/market profile of a firm
  in the future.
• New Products currently represent 50 of
  companies sales revenues, and 40 of their
  profits.
• 46 of new product development costs go to
  failures. RD resources are limited within
  organizations. It is critical to choose new
  product development projects carefully.
• Choosing the right projects is critical to a
  companys future success and profitability.

Source Study by Booz, Allen, Hamilton,
2003 Source New Products The Challenge in this
New Century, R.G. Cooper, 2003
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What is Project Portfolio Management?

• The process of managing new product ideas,
  proposed projects, and active projects as a
  portfolio to
• Maximize the value of the portfolio
• Keep it in balance
• Align it with company strategy
• By evaluating the portfolio as a whole, a big
  picture is presented and used to prioritize and
  select projects.
• Portfolio management is about resource
  allocation, project selection, and strategy.

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What happens without Portfolio Management
Immediate Result
End Result
A reluctance to cancel projects. Too many
projects in the funnel. Lack of focus.
Too many projects resources Spread too thin.
Nothing gets done.
TTM Suffers
Weak Decision Points Poor Go/Kill decisions
Too many low value projects Good projects are
starved
Too few stellar product winners Many ho hum
launches
No rigorous selection criteria. Projects selected
on emotion or politics.
Wrong projects are selected .
Many failures and revenue impact
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Elements of Portfolio Management

• Product Strategy
• New product goals
• Areas of focus
• Relative priorities (i.e. investment by market,
  product area, and project type)
• Product Development Process
• -Stage gate process with Phase Reviews (CPD
  PSC)
• Portfolio Review
• Do we have the right projects?
• Are we allocating our investments properly

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Implementing Portfolio Management at C-COR

• Objectives
• Increase Platform ROI
• Prioritize Product Roadmap Establish a common
  mindset around decisions.
• Evaluate concepts/ideas/approved projects, etc
  with a single tool.
• Apply value to product roadmaps.

• Benefits
• Eliminate Opinioneering
• Provide visibility to the decision making
  process.
• Capture assumptions
• Allow Gap analysis of long term revenue forecasts
  vs. portfolio projections.

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Implementing Portfolio Management at C-COR

• Tools
• Project Scoring Sheet
• Product Roadmaps
• Proposals
• Phase reviews

• Inputs
• Project Scores
• Financials
• Probability of Success
• RD Investment
• Assumptions

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Portfolio Management CPD Process
Definition Proposal is presented to PSC. PSC and
Project Team jointly review Proposal and
Portfolio ranking. PSC decision to proceed, place
on hold, or cancel is made.
DEFINITION
CONCEPT
Concept Proposal is submitted for approval.
Anyone can submit a Concept Proposal
Project Proposal is presented to PSC. PSC and
Project Team jointly review Proposal and
Portfolio ranking. PSC decision to proceed, place
on hold, or cancel is made.
Platform/Cross Functional Team completes Project
Scoring Worksheet
Prior to each Phase Review, project team updates
financial metrics, rescores the project if
necessary and updates the Portfolio.
Phase Review is presented to PSC. PSC and Project
Team jointly review Project and Portfolio
ranking. PSC decision to proceed, place on hold,
or cancel is made.

• Platform Team and Business Development Rank and
  Review Portfolio.
• Decision is made to
• Bring project to PSC for Definition Approval or
• Place effort on hold or
• Cancel effort

Scored project is added to the portfolio and
ranked with other projects
Definition Phase is executed. Business Case,
Risk, Project cost, etc is refined. Project
Scoring is revisited by Project Team. Portfolio
is updated with results based on work completed
in the Definition Phase. Portfolio is reviewed
and ranked by Project Team.
The Project Portfolio is a living document,
continually changing based on new idea entry,
updates to existing projects, etc
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The Portfolio and Product Roadmap

• The portfolio output is a data point, to be
  considered along with other data points during
  Product Roadmap generation.

• Product Roadmap updated quarterly based on
  these inputs.

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Portfolio Management Execution

• Platform /Cross Functional Team
• Complete Project Scoring Sheet after Concept
  Approved
• Add project to Project Portfolio Scoring Summary
• Rank and Review portfolio
• Make decision to proceed to Definition Proposal
• Solicit outside expertise as necessary.

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Portfolio Management Execution

• Project Team
• Complete Definition Phase Project Proposal
• Update Project Business Case and Project Scoring
• Update Scoring Sheet based on subsequent Phase
  reviews
• Rank and Review portfolio
• Solicit outside expertise as necessary.

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Portfolio Management Execution

• Product Steering Committee
• Review Project Portfolio in brief monthly (PSC
  meetings), in depth quarterly
• Challenge Assumptions
• Use Phase Reviews to ensure resources are only
  applied to projects that fit the portfolio
  criteria and have a high priority

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Portfolio Management Execution

• Business Development / Engineering Management
• Interface/Advise Platform Teams and PLMs
  regarding Portfolio
• Review and update Product Roadmap quarterly based
  on resources, portfolio output, timing, and key
  accounts.

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Project Scoring Sheet

• Contains information relative to
• Project Scope
• Project Cost
• Probability of Success
• Financials Revenue projections, NPV
• Project Score
• A list of weighted questions separated into major
  categories designed to provide an overall score
  for the project.
• Created after Concept Approved and updated at
  each Proposal/Phase Review or as necessary.

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Project Scoring Summary

• Summary sheet which contains all projects in the
  portfolio
• Ranked by
• NPV
• Probability of Success
• Score
• Projects are added to the summary sheet as their
  scoring sheets are completed.

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Bubble Diagrams

• Provide a visual representation of balance in the
  portfolio.
• Derived from Project Summary sheet.
• Displays projects in 4 quadrant model to identify
  balance.

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Bubble Diagrams

• Winners high reward and high probability of
  successwe like these
• Long Shots- high reward and low probability of
  successmay require technical breakthrough
• Maintenance low reward and high probability of
  successtypically Application Modules or
  Application Extensionsit is common for companies
  to have too many of these
• Dogs low reward and low probability of
  successdifficult to cancel once approved

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References

• Portfolio Management Websites
• http//www.npd-solutions.com/portfolio.html
• http//www.pd-trak.com/
• Portfolio Management Books
• Robert Cooper, Scott Edgett, Elko Kleinschmidt,
  Portfolio Management for New Products, 2nd ed.
  (Cambridge, MA Perseus Books, 2001), ISBN
  0-7832-0514-1

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References

• Stage Gate Product Development Websites
• http//www.npd-solutions.com
• http//www.goldensegroupinc.com/
• http//www.prod-dev.com/dr_cooper.shtml
• http//www.newproductdynamics.com/stage_gate.htm
• Stage Gate Product Development Books
• Robert Cooper, Winning at New Products
  Accelerating the Process from Idea to Launch, 3rd
  ed. (Cambridge, MA Perseus Books, 2001), ISBN
  0-7382-0463-3