Despite the chilly response, Scientific Atlanta worked hard to lower production costs. As a supplier for 52 of the 100 largest U.S. cable-TV systems, Scientific Atlanta is now selling 100,000 Explorer boxes a week. Considering its heady gains earlier this year and where it is now, many Wall Street analysts believe Scientific Atlanta has room to run. Underpinning his price target is a belief that cable systems will soon start subbing out their antiquated analog boxes in favor of new digital systems like the Explorer. But Scientific Atlanta's top brass is betting that its new technology will enable it to close the gap with GI, its old nemesis.
Nothing is wrong with being a close second in a booming market.
Scientific Atlanta saw its backlog of orders soar to 2.1 million in December, vs. 1.7 million in September. And the company has future upgrades of its Explorer series in the works that could drive demand even further. Some analysts believe that Scientific Atlanta has even more upside, thanks to its success in developing a common operating system for all digital set-top boxes, which it's now licensing to other box makers. While IBM held the early edge with DOS, it thought the real profits lay on the hardware side. Walhman sees parallels in the digital-box business.