Scientific-Atlanta hurdles 4Q estimates on strong digital cable sales

Scientific-Atlanta Inc. (NYSE: SFA) rolled past analysts' estimates in its fourth quarter Thursday, raking in $26.4 million, or 33 cents a share, on sales of $355.2 million.

First Call consensus expected the maker of digital and analog set-top boxes to earn 28 cents a share in the quarter.

The $355.2 million in sales marks a 17 percent improvement compared to the year-ago quarter when it earned $20.1 million, or 25 cents a share.

Its shares closed up 9/16 to 39 13/16 ahead of the earnings report.

Including a $20.9 million gain from investments, Scientific-Atlanta earned $47.3 million, or 59 cents a share, in the quarter.

For the fiscal year, the company pocketed $60.7 million, or 77 cents a share, on sales of $1.24 billion.

"Record sales in our Broadband Segment, in both the transmission and subscriber businesses, are being driven by the cable industry's accelerating moves into Internet-Protocol based digital interactive services," said CEO James McDonald in a prepared release. "It is increasingly clear that the cable industry is entering a new phase of growth, and Scientific-Atlanta is well positioned to benefit."

The new phase is digital cable.

In the quarter, Scientific-Atlanta installed 79 digital interactive cable systems to its customers. Of those installed, 58 cable systems have launched commercial services to paying customers. This compares to 24 systems launched at the end of the previous quarter and 8 systems at the end of the second quarter.

Scientific-Atlanta shipped 511,000 digital set-top units in the fiscal year with more than 230,000 of those units already installed in the cable subscribers' homes. It says cable providers are installing set-top boxes at a rate of more than 20,000 units a week compared to 4,000 units a week at the beginning of the fourth quarter.

It also shipped another 472,000 analog set-top boxes in the quarter, down from 503,000 in the third quarter.

Scientific-Atlanta shares hit a 52-week high of 41 1/4 in July after bottoming out at 11 3/4 in October.

Fifteen of the 18 analysts following the stock maintain either a "buy" or "strong buy" recommendation.