Scientific-Atlanta said it will provide Adelphia with 1.6 million digital interactive set-tops by the end of next year and 250,000 DOCSIS (Data Over Cable Service Interface Specification) modems by end of 2002, subject to certain conditions. Scientific-Atlanta also will provide 40 digital head ends, the back office gear needed to communicate with the subscriber boxes.
The Atlanta-based equipment maker also said it will boost its output of digital set-top boxes to 1.3 million units per quarter beginning next year. Current production is approximately 60,000 units a week, with plans to increase capacity to 80,000 units a week in July 2000.
The news could be good for component makers such as Broadcom, which makes the bulk of chips used in cable modems and digital set-top boxes.
Merrill Lynch analyst Michael Ching predicted the increased capacity will allow the company to produce 4.3 million digital set-top boxes in fiscal 2001, up from an earlier forecast of 3.8 million units. Ching also upped his revenues projection to $2.36 billion from $2.2 billion and his earnings estimate to $1.15 per share from $1.07 per share for fiscal 2001.
"We remain very bullish on opportunities in the cable industry, as operators build out networks for digital video, voice and data," Ching wrote in a research note. "We continue believe that Scientific-Atlanta, with its leading position in transmission and growing share in set-tops, is one of the best ways to play the growth in this market."