S-A withdraws guidance, cites dismal MSO reports
Spooked by the slew of negative news from MSOs and their filings, Scientific-Atlanta withdrew its guidance for its first quarter and year 2002 results.
MSO results show that while the total number of digital subscribers increased, most MSOs showed a decline in the net new digital subscribers added in the first quarter and beyond. And despite upbeat outlooks on the MSOs' part in the second quarter, "The declines in the deployment rates for the second calendar quarter reported after our earnings release and conference call (on July 19) could have an adverse effect on our first quarter and thereby on our fiscal year 2002 results," says CFO Wallace Haislip.
Not only that, the reduced deployment rates mean MSOs won't go through their excess inventory any time soon. And as far as digital ITV, "a relatively new business," Haislip says, there's no precedent to tell what may affect demand. "A declining economy may adversely affect consumer purchases of new digital services, and thus purchases of our digital products by the MSOs, even if it does not impact monthly MSO subscription revenue," he says.
Haislip concludes that the uncertainties created by the situation prompted the withdrawal of any guidance the company offered.
S-A last month reported net earnings of $73.4 million, or 45 cents a basic share, in its fourth quarter ended June 29, up from $59.1 million or 37 cents a basic share a year ago. Fourth-quarter sales reached $619.6 million — up from $552.6 million a year ago.
Its year-end sales ended June 29 reached $2.5 billion, up dramatically from $1.7 billion a year ago. Net earnings for the year were $333.7 million, or $1.99 a diluted share, compared with last year's $155.8 million, or 94 cents a share, in net earnings.