Earnings tomorrow, July 27th and the forecast looks fantastic. Consensus is a profit of 26 cents and shipment of about 750,000 digital set-top boxes.
Here is a great article about SFA from Bloomberg, says:
SFA stock price is expected to more than double from current levels! SFA will probably announce a second stock split!
Good luck,
Eric
Scientific-Atlanta Shares Seen Rising by Investors:
Spotlight
By Jonathan Make
( Ref: quote.bloomberg.com )
Norcross, Georgia, July 16 (Bloomberg) -- Scientific-Atlanta Inc. shares, the best performer on the S&P 500 Index this year, are expected by investors to keep rising as the company beats earnings forecasts on sales of its television set-top boxes.
The No. 2 U.S. maker of set-top boxes for digital TV, which offers hundreds of channels and Internet service, has earned more money than analysts expected for six consecutive quarters. Fiscal fourth-quarter results, which will be released July 27, may again beat estimates, investors and analysts said.
Scientific-Atlanta shares have more than doubled in 2000, and some expect a stock split. Sales are forecast by investors to grow as much as 30 percent annually from $1.5 billion expected this year. Investors said they own shares in the company, founded in 1951, because it's benefiting from surging demand for TV, Web and telephone service over cable, without the risk of a startup.
``You're betting on a company that is already profitable, with experienced management,'' said Art Bonnel, manager of U.S. Global Investors' Bonnel Growth Fund, who first bought Scientific- Atlanta stock in 1995. ``The price could easily double from current levels. That wouldn't surprise us at all.''
The company is poised to take advantage of demand for digital TV in two ways, analysts and investors said. Scientific-Atlanta will sell more equipment to transmit TV programming over cable lines, which in turn are connected to its set-top decoder boxes inside homes.
Best Performance
Cable operators have been working to upgrade their networks for digital TV, which lets viewers play interactive games, get video on demand and purchase goods. Scientific-Atlanta has boosted production to keep up, as industrywide sales of all TV boxes and other cable equipment for homes are forecast to rise by almost half this year to $2.9 billion.
Scientific-Atlanta shares Friday rose 5/16 to 86 3/16 in New York Stock Exchange trading.
The Norcross, Georgia-based company, which first sold stock in 1959, has seen the price more than quadruple over the past year. Scientific-Atlanta and Advanced Micro Devices Inc. are tied for the best performance this year on the S&P 500 Index, having both gained 209 percent. !!!
Some analysts and investors said Scientific-Atlanta is likely to split the stock to make it less expensive for individual investors, who own about 20 percent of its shares. Nice small I.I. float!!,
The company, which said it's in a ``quiet period'' before reporting earnings, declined to comment.
Although those who follow Scientific-Atlanta expect earnings to grow, several analysts said the stock is overvalued because it trades at a higher price-to-earnings multiple than some rivals.
Seventeen stock analysts actively follow the company. Fourteen rate it a ``buy'' -- meaning they think the shares are likely to rise -- while three have a ``hold'' rating, according to Bloomberg analytics.
Price-Earnings
Scientific-Atlanta trades at 104 times estimated per-share earnings this year. That compares with a price-earnings ratio of 44 for Antec Corp. and 66 for C-Cor.net Corp., two other makers of cable equipment.
Well this had to make you feel good: considering Antec & C-Cor are pretty far down the value chain compared to SFA...
``I think there are better places, particularly within the cable-equipment area, to have your money,'' said Eric Buck, an analyst at Wasserstein Perella Securities Inc. who has a ``hold'' rating on Scientific-Atlanta. ``The market tends to get overly exuberant at times when we're going through periods of rising expectations.''
Still, Buck and other analysts said they expect Scientific- Atlanta to beat their forecasts for earnings and set-top box shipments in the fiscal fourth quarter ended June 30.
So understand this guy's manipulation: this Buck guy is saying don't buy - but then goes on to say that even HE EXPECTS SFA TO BEAT ESTIMATES!!!
The company is expected to report profit of 26 cents a share, the average estimate of analysts surveyed by First Call/Thomson Financial. Analysts expect the company to ship about 750,000 digital set-top boxes.
Digital TV
Demand for Scientific-Atlanta set-top boxes and other cable equipment won't soon taper off, because cable operators have just begun introducing digital TV, investors say.
The number of subscribers is forecast almost to double to 5.7 million U.S. homes -- about one in 13 cable customers -- by the end of the year, said Allied Business Intelligence Inc. director Marc Liggio. Scientific-Atlanta can make 4 million digital set-top boxes annually at its main plant in Mexico.
Orders for all cable equipment are forecast to rise more gradually, to about $13.2 billion next year, 7 percent more than in 2000, according to Buck. Scientific-Atlanta's transmission unit, its No. 2 division behind set-top boxes, makes modulators to convert TV signals sent over high capacity fiber-optic lines to electronic signals sent into homes over coaxial cables, said Greg Mesniaeff, a Robinson-Humphrey Co. analyst.
Scientific-Atlanta is the only independent maker of set-top boxes, transmission equipment and software, which investors said is why it carries a higher valuation than rivals that don't make a full product line. The company's biggest rival is Motorola Inc., which bought General Instrument Corp. for $17 billion in January to become the No. 1 maker of set-top boxes.
``The only end-to-end solution with software that actually works is Scientific-Atlanta,'' said Noah Blackstein, manager of the Dynamic Power American Fund in Toronto, which owns about 100,000 shares. ``In terms of what's going on in the cable space, these guys are incredibly well positioned.'' |
