Scientific-Atlanta is the industry's leading supplier of broadband communications systems and satellite-based communications networks. Best known for making Home Communications Terminals (those cable boxes on top of your TV set), the company also produces digital video compression products, transmission and distribution equipment, and satellite equipment and systems. SA was formed in 1951 by seven professors from the Georgia Institute of Technology (Georgia Tech). They started out making electronic test equipment for antennas and performing instrument maintenance for local schools and hospitals. Soon after, they began doing contract development work for private industries and the military.

A leader in communications systems

In 1973, the company launched its first satellite earth station, used to provide cable TV services. It quickly became a leader in the burgeoning industry. In 1978, it acquired Spectral Dynamics, a scientific equipment manufacturer with an established sales network in Europe. Using that network, the company easily transformed itself into an international force. After restructuring and extensive layoffs in the late 1980s, the company set its focus on satellite communications and put a considerable investment in R&D. In 1996 the company acquired ATx Telecom Systems, a fiber-optics company. Sales declined after passage of the 1996 Telecommunications Act, so the company strengthened its focus on digital cable and interactive products. It also intensified its international presence with the purchase of Arcodan A/S, a Danish technology firm specializing in optoelectronics and radio distribution equipment. Scientific-Atlanta has also forged strategic alliances with a number of American and international companies, including BT (formerly British Telecom), Siemens Public Communications Network Group, PowerTV (actually a subsidiary of SA, which develops software for its set-top boxes), Adelphia Communications Corp., Eastman Kodak, Luminous Networks, and ViaStat.

Reorganization

In June 1998, SA announced a restructuring move that would eliminate 275 jobs at its Atlanta HQ, and relocate 150 employees from other company outposts. It would also reduce costs by transferring production of one line to its Mexican factory. The company built a $40 million facility that consolidated its Atlanta operations, which were scattered in 18 locations. In early 2000, SA announced that it would hire nearly 200 new employees.

The digital set-top box

In 1998, the company introduced its Explorer 2000 interactive digital set-top boxes. Equipped with a cable modem, the product allowed users to access interactive applications on their TV sets. These included Internet access, video on demand, and home shopping. SA also offered a cheaper, analog version with e-mail, web-browsing, enhanced television and less extensive video-on-demand capabilities. In April 1998, Scientific-Atlanta announced an agreement with Sun Microsystems to license Sun's PersonalJava application for the Explorer 2000. SA also spoke with companies like Oracle, and WorldGate about further software applications to run on its new Explorer 2000 box, a product capable of delivering full video on demand.

Strokes of luck

Recent decisions outside of SA's control have benefited the company immensely. In 1999, Scientific-Atlanta received a huge boost when AT&T announced its plans to buy MediaOne for $62 billion. AT&T planned to use MediaOne's digital networks to offer many services other than television. Scientific-Atlanta knew that this would spell a boom in demand for the company's equipment line that enabled cable operators to provide two-way digital television. In addition, a recent decision to split SA competitor Microsoft will likely slow Microsoft's development, and consequently, will help SA. Finally, after the recent AOL-Time Warner merger, an increased number of customers will seek interactive Web access. The resulting increased demand for digital set-top boxes will benefit SA; Time Warner already is the company's largest customer.

Digital television is a go