Scientific-Atlanta rose almost 4 percent to $34.1875 in afternoon trading, nearing its 52-week high of $34.4375. General Instrument, after reaching $40.4375 earlier today, has pulled back to $39.75 but is still within spitting distance of its 52-week high of $41 per share.
General Instrument and Scientific-Atlanta's rise seems to be the result of a general optimism that cable equipment makers stand to benefit from the wave of deals and associated influx of capital into the cable industry.
"Everyone views these most recent high-profile deals as a sign that interactive digital technology is really going to take off," said Cynthia Brumfield, principal analyst with Broadband Intelligence.
The set-top box is being seen increasingly as the touch point for convergence in the computer, TV, and phone industries. Many of the biggest companies in all those fields are salivating for a bigger piece of the pie, and hardware makers like SA and GI will be among the benefactors.
Scientific-Atlanta has gained 7.1 percent this month, after initially losing ground on news that Microsoft would be investing $5 billion in AT&T to ensure that at least 7.5 million cable set-tops would use Microsoft's Windows CE software.
General Instrument has gained 8.2 percent this month, based in large part on assumptions that GI will get to build the bulk of the 2.5 to 5 million extra boxes that AT&T will use as a part of the Microsoft deal.
Scientific-Atlanta recently posted record earnings based on a continued push by cable operators to upgrade their networks with digital equipment.
Sales of broadband equipment to cable television operators are surging as those firms continue to upgrade their networks to be able to handle two-way data communication, which is required to roll out enhanced TV services such as Internet access, email, and video on demand. Many in the industry predict that trend accelerating with the Microsoft investment, with GI likely to be the main beneficiary.
"The third quarter is next big leg of growth," for GI, said financial analyst James Kedersha of SG Cowan. That's when GI said it will start shipping its next-generation digital set-top boxes, called the DCT-5000, to cable operators, with AT&T being the largest customer.
Meanwhile, Broadcom, which is a large supplier of chips to cable equipment makers, gained 5.28 percent to $88.4375 in afternoon trading, a gain of $4.4375 amid reports about a new chip for networking that the company is expected to announce later today.
The company is expected to introduce a new chip that enables superfast communication over regular Ethernet networks commonplace in most office environments today. The Wall Street Journal reported that the chip will permit data to flow at one gigabit per second through copper-based wiring, which will be a less expensive method compared to the fiber optic wiring now required by gigabit Ethernet networks, the paper reported.