Scientific-Atlanta won't meet Street

The telecommunications equipment maker warns that its earnings will not meet expectations, blaming weakness in the international markets.

2 min read
Telecommunications equipment maker Scientific-Atlanta warned that its first quarter earnings will not meet expectations, attributing the shortfall to weakness in the international markets.

The company announced that overseas weakness continues to affect its sales and that it expects its sales for the first quarter will be approximately $257 million compared to the year-ago quarter sales of $295 million.

Scientific-Atlanta said these developments will have a "significant impact" on the company's first quarter earnings. The company reported that it anticipates that earnings per share will be in the range of 2 cents to 5 cents. A consensus of Wall Street analysts expected the company to earn 22 cents a share, according to First Call.

Shares of Scientific-Atlanta fell 3.55 percent yesterday to close at 20.38. The stock has traded as high as 27.94 and as low as 14 during the past 52 weeks.

The company reported that international sales were approximately $54 million, or 21 percent of total sales, compared with $116 million, or 40 percent of total sales, in last year's first quarter. Compared to last year's first quarter, international sales were down $62 million, or 54 percent, with major declines in all nondomestic regions, including a $38 million decline in Asia Pacific. Although sales from the Asia Pacific region remained flat compared with the fourth quarter of fiscal 1998, sales from Europe and Latin American declined approximately $19 million compared with the fourth quarter.

Domestic sales grew approximately $24 million year over year, or 13 percent, but the growth was not enough to overcome the decline in international sales.

Scientific-Atlanta said the fall in international sales was due primarily to softness in the company's satellite and transmission businesses. The shortfall in the company's satellite operations was caused by delays in shipments of PowerVu digital compression systems in India.

The company was also hurt by the loss or deferral of customer funding for some orders in Eastern Europe and Asia Pacific, and by the slowness in cable TV related satellite activities abroad.

Scientific-Atlanta said it expects to continue to experience softness in its satellite business because of its significant reliance on international markets.