ITV

Tag: Jim McDonald

  • Cisco Systems to acquire Scientific-Atlanta for $ 6.9 billion

    Cisco Systems to acquire Scientific-Atlanta for $ 6.9 billion

    MUMBAI: Cisco Systems, Inc., and Scientific-Atlanta, Inc., today announced a definitive agreement for Cisco to acquire Scientific-Atlanta for $ 6.9 billion.

    Under the terms of the agreement, Cisco will pay $43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options, for an aggregate purchase price of approximately $6.9 billion, or approximately $ 5.3 billion net of Scientific-Atlanta’s existing cash balance.

    Scientific-Atlanta is a global provider of set-top boxes (STBs), end-to-end video distribution networks and video system integration. The combined entity creates a major end-to-end triple play solution for carrier networks and the digital home.

    The deal will set the ground for Cisco’s foray into the US cable sector. The company already has a strong foothold in the cable television market and is expected to use the Scientific-Atlanta expertise to sell digital television equipment that provides high-definition programming; shows and movies on demand; and an array of interactive services.

    In addition, upon closure, the market opportunities represented by this acquisition will become part of Cisco’s Advanced Technology portfolio.

    “Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services. The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco’s commitment to and leadership in the service provider market. Moreover, Cisco’s international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity,” said Cisco Systems president and CEO John Chambers.

    The transaction will be accounted for in accordance with generally accepted accounting principles, and the acquisition of Scientific-Atlanta is expected to close in the third quarter of Cisco’s fiscal year 2006.

    Cisco anticipates this transaction will be neutral to its FY2006 earnings, slightly accretive to its non-GAAP (pro forma) FY2007 earnings, and will be financed with a combination of cash and debt.

    The acquisition has been approved by the board of directors of each company and is subject to various standard closing conditions, including approval under Hart Scott Rodino and similar laws outside the US and by the shareholders of Scientific-Atlanta.

    Chambers added, “As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco’s leadership position across the entire networked digital home.”

    “We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers and our employees. The combined strengths and resources of our two companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might not have existed otherwise,” said Scientific-Atlanta chairman, CEO and president Jim McDonald.

    Scientific-Atlanta has platforms and technologies that enable scaling to millions of subscribers quickly and easily. This, along with the Cisco IP Next Generation Network architecture, will offer providers an open platform for service differentiation, allowing them to move beyond video/IPTV to develop and deliver a variety of integrated media services in the connected home.

    Following the close of the transaction, Scientific-Atlanta will become a division of the Routing and Service Provider Technology Group under the leadership of Cisco senior vice president Mike Volpi. McDonald will report directly to Volpi.

    Prior to the close, Cisco and Scientific-Atlanta will operate as separate businesses and will continue to work with their existing partners. Following the close of the transaction, Cisco is committed to retaining the relationships and go-to-market strategies that both companies have developed.

    For FY2005, which ended 1 July, 2005, Scientific-Atlanta reported revenues of $1.91 billion.

  • Scientific-Atlanta 3QFY03 earnings at $26.8m

    Scientific-Atlanta 3QFY03 earnings at $26.8m

    ATLANTA: Scientific-Atlanta, Inc reported third quarter earnings of $26.8 million, or $0.18 per share, on sales of $382.6 million. Third quarter earnings declined $17.0 million, or 39 per cent from the comparable period of the prior year, when earnings were $43.8 million, or $0.28 per share. Compared to the preceding quarter, earnings increased by $11.7 million, or 77 per cent.

    The company claims to be a leading supplier of transmission networks for broadband access to the home, digital interactive set-tops and subscriber systems designed for video, high-speed Internet, and voice over IP (VoIP) networks, and worldwide customer service and support.
     

    During the quarter, the company recorded a pre-tax charge of $3.6 million related to previously announced restructurings; and pre-tax charges of $6.9 million associated with the mark-to-market adjustments of various equity investments. The after-tax impact of these items was $6.9 million, or $0.04 per share.

    Summarizing the third quarter results, chairman and CEO Jim McDonald elaborated: “We had another good quarter in an environment that remains mixed. The increased acceptance by our customers of new products in the past several quarters reinforces our belief that innovation continues to be an important driving force in the cable industry. We intend to continue to be an innovation leader in the industry; and amid the current economic and industry uncertainty, we intend to maintain our focus on execution.”

    Other highlights

    A press release states that Scientific-Atlanta sold 929 thousand Explorer digital set-tops, including 106 thousand Explorer 8000 home entertainment servers and 54 thousand high-definition (HD) set-tops. In total, set-tops with digital video recording (DVR) capabilities, HD capabilities, or integrated DOCSIS cable modems constituted more than 50 per cent of set-top shipments.

    The release adds that Scientific-Atlanta continues to expand its high-speed data product line and add new features to existing products. In the quarter, the DPX2100 cable modem received DOCSIS 2.0 certification. The company sold 171 thousand WebSTAR(tm) cable modems in the third quarter.

    The release also adds that digital technology also is continuing to change the way content is delivered to cable headends. In the past several weeks, the company announced that four cable networks have chosen Scientific-Atlanta’s PowerVu® digital technology for programme distribution. These include Turner Broadcasting System, Inc., Lifetime Television, The Outdoor Channel, and A&E Television Networks.

    Bookings

    The release states that third quarter bookings were $339.9 million, a decrease of $149.7 million, or 31 per cent, from last year’s third quarter. Compared to the preceding quarter, bookings increased slightly. Results in the preceding quarter included a $19.0 million de-booking related to the termination of a contract with ish, a cable operator in Germany.

    Compared with the same quarter last year, bookings of subscriber products declined by 26 per cent to $214.8 million. Subscriber product bookings declined by 14 per cent sequentially. Bookings of transmission products declined by 43 per cent from last year’s third quarter to $101.7 million.

    On a sequential basis, bookings of transmission products increased by 57 per cent, partially as a result of the $19.0 million de-booking related to the ish settlement in the preceding quarter. Satellite product bookings of $23.5 million were slightly higher than last year’s third quarter, and increased 18 per cent sequentially.

    Backlog

    The release mentions that backlog at the end of the quarter was $339.9 million, a decrease of 56 per cent from the third quarter of last year and a decrease of 11 per cent sequentially. The backlog included approximately 800 thousand Explorer® digital set-tops. Although Scientific-Atlanta has a six-month bookings policy, the company has the production capacity to respond quickly to customer demand, and the company believes that customers may have shortened their ordering cycles accordingly.

    Results of Operations

    The release also points out that sales of $382.6 million decreased by $70.1 million, or 15 per cent from the same period a year ago, but increased by nine per cent compared with the preceding quarter.

    The release reveals that sales of subscriber products decreased four per cent from last year’s third quarter to $269.3 million, but increased 18 per cent sequentially. In the quarter, the company sold 929 thousand Explorer digital set-tops and 171 thousand WebSTAR(tm) cable modems.

    Sales of transmission products of $90.6 million were down 38 per cent from the third quarter of last year, and down 13 per cent from last quarter. Satellite product sales of $22.7 million were down six per cent from the comparable period of last year, but increased 20 per cent from last quarter.

    The release also points out that the gross margin in the third quarter was 34.1 per cent of sales, a decrease of 2.9 points from the same period a year ago, but an increase of 2.5 points sequentially. The termination of the ish contract in the preceding quarter negatively impacted the gross margin by 2.3 points in that quarter.

    There was no comparable transaction in the third quarter of the current year, says the release. The decline compared to last year’s third quarter was primarily due to the increased shipments of new set-top models that currently have lower gross margins than the company average.

    Scientific-Atlanta reported earnings of $26.8 million, or $0.18 per share. This represented a decline of $17.0 million, or 39 per cent from the comparable period of the prior year, when earnings were $43.8 million, or $0.28 per share. Compared to the preceding quarter, earnings increased by $11.7 million, or 77 per cent. Third quarter earnings included the two pre-tax charges totaling $10.5 million discussed above, for which the after-tax impact was $6.9 million, or $0.04 per share.

    Strong Balance Sheet and Cash Flow

    The release also claims that the company’s balance sheet remains very strong with cash and short-term investments of $888.5 million at the end of the quarter, an increase of $105.3 million from the end of the preceding quarter, and an increase of $157.2 million from the end of fiscal year 2002.

    Accounts receivable declined by $55.6 million, and DSO improved to 53 days from 60 days in the preceding quarter. Inventory turns increased to 7.4 from 6.0 in the preceding quarter, says the release.

    In the third quarter, cash provided by operating activities was $185.6 million. Year-to-date, the company has generated $300.1 million of cash from operating activities.