Despite a healthy increase in revenue, Scientific-Atlanta Inc. reported a drop in net income Thursday for its fiscal second quarter partly because of some kind of cable modem glitch.
S-A said total sales for the fall quarter rose to $495.2 million, up 12 percent from $441.7 million a year ago. Yet its net income slipped to $53.4 million, down from $58.7 million a year ago, and $60.7 million in the previous quarter.
The company blamed the earnings decline on several factors, including pre-tax expenses related to its pending acquisition by Cisco Systems Inc., a pre-tax write-down related to an equity investment and a pre-tax stock-option expense. But it also cited “a cable modem issue that was resolved” during the quarter.
In S-A’s earnings call, company executives explained that lightning had damaged the phone jack interfaces of some voice modems while they were in service. So they targeted lightning-prone areas for modem exchanges. Those swaps created a temporary product shortage and an erosion in profit margin.
S-A said it still sold a record total of 981,000 cable modems in its second quarter, up 113 percent from a year ago and up 2 percent from the previous quarter. The total included 391,000 eMTAs, up 234 percent from last year’s second quarter, but down 8 percent from the previous quarter.
Turning to video, S-A said it sold 1.15 million digital set-top boxes in the fall quarter, up a touch from 1.1 million set-tops in the previous quarter. The total included record amounts of high-definition TV (HDTV) set-tops (386,000 boxes) and digital video recorder (DVR) boxes (556,000 boxes).