News

S-A Bullish on Outlook

3/08/1998 7:00 PM Eastern

Scientific-Atlanta Inc. shares soared last week, as the
manufacturer convened in Atlanta with analysts to share information about its mission and
strategic outlook.

S-A's shares stood at $18.81 per share by midday last
Thursday, after rising by $1.62 Monday to $19.13. The movement could have been in
anticipation of S-A's analysts' meeting Wednesday and Thursday. The company
announced no news last week, except for its decision to sell its interdiction line to
Blonder Tongue Laboratories Inc. (see story, page 46).

In a phone briefing preceding its annual analysts'
conference, S-A president and CEO James McDonald said the manufacturer will start shipping
its advanced digital line of headend, network and set-top equipment to nine cable
operators this month. He said S-A is planning to ship "over 100,000" of its
Explorer 2000 set-tops, which handle not just broadcast video, but interactive functions
such as Internet protocol-based e-mail, electronic commerce and video-on-demand.

"We've been working on our digital platform for
five years, and we've spent $150 million on it," McDonald said, adding that the
S-A platform will ship with digital interactivity, and not with broadcast digital services
only, like that of its competitor, General Instrument Corp.

"There's a perception in the industry that
GI's cable business is bigger than we are," he said. "The fact is that
we're closing that gap on both our analog and digital lines."

By starting off with interactive digital set-tops, he said,
operators are assured of additional revenue streams beyond the approximate $10 per month
that some MSOs are charging for a basic digital tier.

"You have to have interactive applications -- the
economics don't work to get $10 per month additional on a box that costs $325,"
McDonald said. "To make it work, you have to have additional revenues in the range of
$20 per month, which means that you need e-mail, Webcasting, electronic commerce and
video-on-demand."

McDonald said S-A's operating-system partner, PowerTV
Inc., is ready with the interactive suite of applications that will link with its
operating system.

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