Motorola Saw Chilly Q2 For Set-Top Deliveries

Spring apparently did little to warm up Motorola Inc.'s cable-gear business, as that unit posted notable declines in sales and revenue.

Motorola's Broadband Communications Sector saw a mixed bag for the quarter. Sales continued to tail off, down 26% to $409 million, compared to the same quarter of 2002. But orders rose 10% and totaled $460 million.

Motorola blames the drop in sales on cuts "reflecting the continued weakness in the cable-equipment industry," Motorola president and CEO Mike Zafirovski said on a conference call to discuss the company's earnings. "We anticipate the cable industry cap ex decline is bottoming out, as reflected in our order growth of 10%."

Motorola also blames that drop on declining sales, although it was able to offset the decline with lower operating expenses.

Equipment shipments presented a similar mixed bag of results. Motorola shipped 1.1 million set-top boxes during the quarter, down considerably from the 1.5 million boxes delivered in the same quarter of 2002. But it also shipped 1.1 million cable modems in the quarter, a 200,000 increase compared to the year-ago period.

Among the bright spots for the quarter was a multiyear agreement to ship Comcast Corp. its DCT 6208 set-top, which sports HDTV and digital video recording capabilities.

The outlook is fairly grim for the sector through the remainder of the year. Estimates predict that the broadband-equipment industry is expected to dwindle 15% for the entire year.

Last week, United Kingdom box maker Pace Micro Technology plc also posted declining numbers for its fiscal year ending May 31.

It noted that U.S. MSO client Time Warner Cable has focused on distributing the boxes it bought from Pace the year before, rather than adding to the order. That decision partially contributed to a drop in revenues at Pace's U.S. unit, from approximately $60.6 million to $14.3 million.

Scientific-Atlanta Inc. was set to release earnings July 17, but those results were not available as of press time.