Set-top maker starts anew
NextLevel Systems continues its restructuring, naming a new CEO and resuming its original corporate identity, General Instrument.
The announcements were accompanied by news of a major deal with cable service operators that will secure the company a significant portion of the lucrative next-generation cable set-top box market. (See related story.)
NextLevel Systems is changing its name to General Instrument, and will operate NextLevel Communications as a subsidiary that will focus on the telephony business.
The company's stock ticker will change to "GIC" as of February 2.
GI's new chairman and CEO is Edward Breen, who has been president and acting CEO of NextLevel Systems. GI also named him to the board's executive committee.
"We have accomplished a great deal in the past 60 days to increase shareholder value," Breen said in a statement. "We expect these transactions with the leading cable [system operators]...to provide a strong foundation for our business."
The company began work in October to shore up its financial foundation. NextLevel announced earlier this year that it would consolidate its Chicago corporate headquarters into its Horsham, Pennsylvania, cable TV facility. It also cut 225 positions at its satellite TV facility in San Diego and closed its similar facility in Puerto Rico, which employed 1,000 workers. The consolidation of the Chicago headquarters will result in 20 layoffs, for a total of a 16 percent reduction in the company's workforce.
The company had blamed its restructuring effort on its flagging satellite TV operations.
General Instrument will incur after-tax charges of between $65 and $100 million, or between 42 and 64 cents per share, in the current and coming quarter. The charges are principally related to the restructuring.
The company today also announced a deal to provide next-generation cable set-top boxes to what it describes as half of the cable service industry. Nine cable operators will purchase at least 15 million set-top devices over the next three to five years in a deal that the company values at at least $4.5 billion.
These companies, which will get the option to purchase about 16 percent of General Instrument equity for about $15 per share, include Tele-Communications Incorporated. GI would not disclose the names of the other companies.
Analysts praised the deal as a major coup for the set-top box maker, which had stumbled after the traditional set-top box market reached virtual saturation a few years ago.
GI will also acquire TCI's "Head End In the Sky" capabilities, which regulate the dissemination of and payment for programing. TCI will receive a ten percent equity interest in GI.