Missing out on Scientific-Atlanta's rise
By David B. Wilkerson, CBS MarketWatch
Last Update: 12:49 PM ET Oct 3, 1999
ATLANTA (CBS.MW) -- Some people have a legitimate excuse for not being a part of the stratospheric, yet entirely predictable, run that Scientific-Atlanta shares had from April until a few days ago.
Reporters who cover the cable television industry, to cite a painful example, are prohibited from owning stocks like Scientific-Atlanta.
The company (SFA: news, msgs) makes digital set-top boxes that allow such new cable services as video-on-demand, telephony, e-mail, high-speed Internet access and secure online shopping. Scientific-Atlanta also has a leadership position in the manufacture of transmission network systems, which are the nuts-and-bolts applications that help pipe video and voice data into customers' homes.
Scientific-Atlanta should've been on a savvy investor's radar screen at least as far back as early April.
You may recall that in late March and early April, Gemstar (GMST: news, msgs), best known for its VCR Plus automatic recording system, was setting record highs daily. Not for the VCR Plus, but because of its interactive television program guide technology.
Gemstar's stock ran up from 57 in late March to 105 1/2 by April 8. The big deal with that Pasadena-based concern, then as now, was that, as Hambrecht & Quist analyst Joseph Arsenio put it, the interactive guide will become "a must-have feature in a digital TV environment of 100 channels or more" and figures to be the gateway to various enhanced services such as pay-per-view, Internet access, telephony and videophone.
So even if you missed out on Gemstar's meteoric rise, you had to figure that, if the program guide was worth so much, the box that delivered it to people should be worth something. Scientific-Atlanta and its larger rival, General Instrument (GIC: news, msgs), would seem to have been pretty firm bets around that time.
Scientific-Atlanta was ripe for the taking at 26 15/16 when the market closed April 8. It ran up to a 52-week high of 58 13/16 by Sept. 14 -- partially spurred by the imminent news that General Instrument was going to be acquired. Since Motorola (MOT: news, msgs) made the GI takeover news official, Scientific-Atlanta has slowed down a bit, closing at 47 15/16 Friday.
It's obvious, but it bears repeating: When a device or a form of technology gets hot, look around for related players who might facilitate or benefit from that innovation. |
