S-A Sees Recovery, Strong HDTV Sales

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High-definition set-top-box shipments and rising sales helped
Scientific-Atlanta Inc. to improve in the third quarter, but the cable-systems
supplier is still well below business levels of a year ago.

The third quarter ending March 29 logged $489.6 million in bookings, a slight
increase from the prior quarter but still down compared with $712 million a year
ago.

Similarly, sales totaled $452.7 million, a $34.5 million increase compared
with the second quarter but below the $663 million total from the third quarter
of 2001.

Net earnings totaled $43.8 million at 28 cents per share, also below $76.2
million in the same quarter last year.

S-A shipped approximately 879,000 'Explorer' set-top boxes and 183,000
'WebStar' cable modems in the quarter.

Shipments of the new Explorer '3100 HD' set-top box with its
high-definition-television capabilities began in the quarter, with 38,000 units
sent to six unnamed customers in North America.

In an earnings conference call, S-A chairman and CEO Jim McDonald noted that
the push for HDTV has been fueled by consumer demand and pressure from
regulators, but it is also seen as a competitive marker between cable and
satellite systems.

'We believe the move toward HDTV favors cable operators since they have more
bandwidth available on their upgraded systems,' he added.

Bookings for transmission products also rebounded 11 percent in the quarter
to total $162.9 million. And McDonald noted a 'modest increase' in activity for
AT&T Broadband in network-upgrade gear.

Pricing for digital set-top boxes, meanwhile, can be expected to continue its
decline in line with the 15 percent drop seen last year, McDonald said. The
exception will likely be in the Explorer 3100 HD unit and the Explorer '8000
PVR' box, the latter of which started shipments this week.

Along with earnings, S-A also announced new Explorer '2200' and '3200' models
that offer faster processing for a smaller size. And it introduced the 'Prisma
II Targeted Service Delivery' transmitter, a device that offers better bandwidth
per subscriber.

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