Op Cuts Trim Gear Makers' Sales


Motorola Inc. suffered a stock decline last week after reducing its fourth-quarter revenue forecast from $7.5 billion to $7.1 billion, citing weakness in the semiconductor, infrastructure and broadband sectors.

Last Tuesday, Motorola reported sales of $6.4 billion and net earnings of $111 million, compared to revenue of $7.4 billion and a net loss of $1.4 billion in the year-earlier period. Cost cuts and layoffs helped the company to achieve year-over-year earnings gains.

The Broadband Communications Sector — which makes cable set-tops and other gear — continued to get hit hard by operator cutbacks in capital expenditures. Sales were down 19 percent to $519 million, while orders decreased 40 percent to $385 million.

The broadband division produced operating earnings of $66 million, compared to $46 million in the year-earlier period.

Also last week, Scientific-Atlanta Inc. reported first-quarter sales of $311.6 million, a 24 percent drop over last year's $410 million sales figure. Earnings were $11 million, versus $37 million in the year-ago quarter.

The company recorded $8.7 million in pre-tax charges in the quarter for bad debt and equity-warrant adjustments, which would have produced earnings of $19.8 million.

S-A cited continued capex cuts for the revenue drop, but said cost-cutting measures — including the elimination of 400 jobs — helped to boost earnings.

S-A said it shipped 546,000 Explorer set-tops in the quarter, excluding 60,000 units to Cablevision Systems Corp.

Time Warner Cable took delivery of 90,000 Explorer 8000 boxes, while Cox Communications Inc. signed for S-A's 3100HDTV set-top.

S-A said 20 percent of all set-top shipments in the quarter involved either the 8000 or the 3100. The vendor also resumed shipments of subscriber and transmission products to Adelphia Communications Corp. during the quarter.

S-A chairman and CEO Jim McDonald said: "Conditions in the cable industry remain difficult. Despite lower revenues, however, S-A continues to be profitable and to generate cash, we have expanded our digital customer base through our win at Cablevision and we have begun to deliver several significant new products."

Another cable-equipment vendor — C-COR.net Corp. — released a rocky earnings report, reporting first-quarter net sales of $44.6 million, a 14 percent drop from the prior year's $52 million. It reported a $7.3 million net loss in the quarter, almost half of which was attributable to costs associated with the acquisition of Philips Broadband Networks.

On a per-share basis, net loss was 20 cents in the quarter, compared to 17 cents a year ago.

C-COR.net did sound hopeful that fourth-quarter sales would improve, estimating revenue from $57 million to $63 million. Revenue and expenses from the Phillips purchase were effective Aug. 26.