Scientific-Atlanta announced yesterday that business is down, but the company has stayed profitable. In its first-quarter results, S-A says it will restructure, and cut 750 jobs and consolide certain operations.
"The company experienced a decline in sales and bookings this quarter," S-A President and CEO James McDonald said in a conference call. "We believe that this decline is attributable to the economic climate, a drop-off in business following the events of Sept. 11, and a decline in the rate of net digital subscriber additions by our customers." That, in turn, caused inventory adjustments among S-A customers, a move that was compounded by speculation about another wave of MSO consolidations, he says.
S-A showed sales of $410.1 million in its first quarter of 2002, ended Sept. 28, distinctly lower than the $597.2 million it reported for the same time a year ago.
The company also reports net earnings of $37.1 million for the quarter, or 23 cents a share, compared with net earnings of $113.3 million, or 71 cents a basic share, a year ago. Bookings fell to $172.1 million, down 74 percent from a year ago.
The company will cut 750 jobs, including 500 in manufacturing and 250 in engineering, marketing, sales, service and administration, it says. "This restructuring will affect each of our three businesses — Subscriber Networks, Transmission Network Systems, and Media Networks, McDonald said. Cuts also will come from SciCare Broadband Services and the corporate staff.
S-A also will consolidate "substantially all of our Atlanta manufacturing operations into our Juarez, Mexico, facility," McDonald said. The consolidation will start immediately and last through the rest of the year.
McDonald said the changes will cut costs and expenses by about $61 million a year, starting in the third quarter. S-A will take a $22 million one-time pretax charge in second quarter, and $9 million in more charges in the second half of 2002.
S-A's stock was up $3.21 to $18.66 a share this morning.