Advanced-digital set-top devices are on the way, General
Instrument Corp. executives assured financial analysts last week.
GI CEO Ed Breen told analysts last Tuesday that progress on
upcoming digital set-top models -- the DCT-2000 and DCT-5000 -- is on schedule. For the
DCT-2000, which has more memory and return-path capabilities than the current DCT-1000 and
DCT-1200 models, this means that "significant" numbers will be available in the
fourth quarter, he said.
The DCT-5000 -- a more advanced version, containing a cable
modem -- will be available in "big volumes" around next May or June, he added.
Breen said "two or three customers" have held up
orders while waiting for the DCT-2000. Even so, GI shipped 420,000 digital boxes during
the second quarter, ahead of volume expectations, bringing the total number of digital
boxes shipped so far to 1.4 million.
"The numbers show that digital shipments are
accelerating," Breen said.
GI raised its projection of digital-box shipments this year
to 1.8 million, from the previous figure of 1.4 million to 1.6 million, he said.
Breen estimated that 850,000 to 875,000 digital boxes were
in subscriber homes, with the rest in the pipeline, as operators market digital service.
About 600 cable systems have deployed digital boxes, he said.
One GI customer, Cox Communications Inc., said last week
that it has passed the 30,000-subscriber milestone in its six-market Cox Digital TV
rollout. Cox also said its digital-TV penetration rose to 3.7 percent June 30, from 1.6
percent March 31.
Tele-Communications Inc. -- which has pushed hardest to
deploy digital TV, partly to avoid rebuilding plant to add channel capacity -- has more
than 400,000 digital subscribers. TCI accounts for about 65 percent of digital-box revenue
at GI, Breen said.
GI didn't break out its digital-cable revenue, but it
said it tripled from last year's second-quarter level, leading to an overall 9
percent revenue rise, from $450 million to $489 million.
Advanced-analog-box shipments were also strong, at 800,000,
compared with about 700,000 in the first quarter, while basic-analog-box shipments
Cost-cutting moves at GI and predictable profit margins on
the digital boxes helped the company to raise its operating-profit margin during the
second quarter to 10.1 percent from 7.9 percent in the first quarter. Breen said GI
reached that double-digit profit margin ahead of schedule.
GI's operating income rose 53 percent in the quarter,
to $49.4 million from $32.2 million, and earnings per share rose 58 percent, to 19 cents
from 12 cents. Net income rose 70 percent, to $30 million from $17.6 million, on a pro
Transmission-system orders rose about 40 percent from the
first quarter, indicating that cable operators are spending more to boost bandwidth and
two-way capabilities, GI said.
Problems at PrimeStar Inc. -- which is waiting for
government approval of a deal with News Corp. that would allow the direct-broadcast
satellite service to shift to high-power service, from medium-power service -- are showing
up in GI's DBS receiver shipments.
While GI normally ships about 150,000 boxes to PrimeStar
per quarter, the company figures that the number will dip to between 115,000 and 125,000
in the third quarter, and to between 80,000 and 100,000 in the fourth quarter.