Vendors Produce Solid Q2 Performances

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Cable vendors continued to see more light at the end of what had been a dark financial tunnel for the sector.

Scientific-Atlanta Inc., Motorola Inc., Terayon Communication Systems Inc., CSG Systems Inc. and CommScope Inc. last week all reported solid second-quarter revenue and earnings numbers.

Scientific-Atlanta generated $70.2 million in fiscal fourth-quarter earnings on sales of $458.8 million, aided by increased demand for advanced set-tops. Revenue in the quarter increased 14%, year over year, while earnings jumped 48%, from last year’s $47.4 million.

S-A said it sold 277,000 standard-definition Explorer 8000 digital video recorders and 106,000 HDTV DVRs in the quarter. The vendor also said it shipped 121,000 HDTV set-tops without DVR capability, giving it 227,000 HD set-tops sold in the quarter.

The company shipped 365,000 cable modems.

“Consumers are increasingly demanding advanced-video services,” said S-A president and CEO Jim McDonald. More than half of all S-A set-top shipments came from higher-end boxes, he said.

The company said Cablevision Systems Corp. is testing its Explorer 8300 Data Over Cable Service Interface Specification-enabled, multiroom DVR, but it wasn’t recognizing any revenue pending final approval by the MSO.

Motorola’s Broadband Communications Sector also enjoyed a strong quarter, with sales reaching $567 million — a 32% increase over second-quarter 2003’s $430 million. The top-line jump boosted operating earnings to $20 million, compared to $5 million in the year-earlier period.

Motorola said it was the division’s third straight quarter of year-over-year sales growth, and the company expects that trend to continue, because it started shipping its dual-tuner DVR in June. Cox is deploying the box; Comcast will begin deployments later this year.

For its part, Terayon narrowed its quarterly loss and named a new CEO last week. Quarterly revenues jumped 40%, from $30.6 million to $42.8 million, which helped the company narrow its net loss to $4.9 million, compared to $13.1 million in the prior-year period. Second-quarter results included a $3.6 million charge related to restructuring activities and executive separation payments.

Terayon also named Jerry Chase as CEO. Chase, who had been serving as chairman and CEO of Thales Broadcast & Multimedia, succeeds Zaki Rakib, who will remain chairman.

CSG Systems reported $22 million in operating income on $129.7 million in revenues in the second quarter. Revenue dropped 9% from $142 million in the year-earlier period, but operating income rose 8% from $20.3 million.

And CommScope reported earnings of $84.1 million on sales of $312.9 million in its second quarter, compared to net sales of $141.4 million and a net loss of $51.4 million in the year earlier period. Last year’s red ink included a $53.9 million charge related to after-tax equity losses for OFS BrightWave and impairment charges on fixed assets.

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