|This article needs additional citations for verification. (January 2010)|
The Scientific Atlanta logo after Cisco's acquisition.
|Founders||Glen P. Robinson
James E. Boyd
|Key people||Tony Bates, Cisco
James F. McDonald, CEO
|Revenue||$1.9 billion (fiscal year 2005)|
|Employees||9,784 (as of June 5, 2007)|
|Parent||Cisco Systems (since 2006)|
Scientific Atlanta Inc is a Georgia-based manufacturer of cable television, telecommunications, and broadband equipment. Scientific Atlanta was founded in 1952 by a group of engineers from the Georgia Institute of Technology, and was purchased by Cisco Systems in 2005.
Scientific Atlanta is a supplier of transmission networks for broadband access to the home, set-top cable boxes, cable modems and digital interactive subscriber systems for video, high-speed Internet, voice over IP (VoIP) networks, and worldwide customer service and support.
Products for the cable TV industry, from fiber optic network equipment for head-end media acquisition, to digital cable boxes (as well as universal remotes to go with them), and cable modems, dominate Scientific Atlanta's sales. Scientific Atlanta also supplies distribution technology to networks such as Bloomberg Television, CNN, ESPN and many others.
In late 1952, Glen P. Robinson and several other Georgia Tech Research Institute researchers, including station director Gerald Rosselot and future station director James E. Boyd pooled funds of approximately $100 each, and started Scientific Atlanta to produce technology developed at the research station. After the fledgling company's first contract resulted in a $4,000 loss, Robinson bought out all but one of the original investors, Sidney Topol, and paid them each back their original $100.
Glen P. Robinson served as CEO of Scientific Atlanta for 20 years, and chairman of the board for an additional eight years, until he retired from the company in 1979. Scientific Atlanta grew dramatically; it earned $3.1 million in revenue in 1962 and approximately $200 million when Robinson left. Sidney Topol served as its president from 1971-83, CEO from 1975-87, and chairman of the board from 1978-90. During his tenure, the company grew in sales to more than $600 million. During the 1970s the company developed the concept of cable/satellite connection, which, in working with HBO and transportable earth stations developed by TelePrompTer Corporation and manufactured by Scientific-Atlanta, established satellite-delivered television for the cable industry. 
During the 1960s Scientific-Atlanta earned a place in the space and defense industries as a manufacturer of electronic testing equipment for antennae. By the end of that decade the company had added instruments for testing telephones and acoustic devices with defense applications. As a military contractor, the company distinguished itself by manufacturing unique electronic instruments for the federal government. According to Business Week, Scientific-Atlanta was a company "fascinated with communications esoterica." Nonetheless, with revenues of just $16 million a year, it was clear that the company had yet to reach its potential.
Scientific-Atlanta applied its energy to opportunities in new fields with large growth potential and few barriers to entry. The company sought out products that were either low-cost and high volume or had a very high price tag. "You've either got to make 10,000 of something worth $100 to $200, or several of something worth $500,000 or $10 million," Topol told the New York Times. The company planned to make the low-cost, high volume end of this equation profitable through aggressive research and development and a strong marketing effort. In its annual report, as reprinted in David C. Rickert's Harvard Business School case study of Scientific-Atlanta, the company stated: "Scientific-Atlanta operates under a disciplined business plan that concentrates on design, manufacture, and sale of standard technical products for the communications and instrumentation markets." More specifically, Topol recounted in Dun's Review, as restated by Rickert, "I asked what products we needed for growing markets, not what markets we should go after because we had a product."
The answer to that question was telecommunications products, primarily the satellite earth station, a large mobile dish used to receive signals transmitted from communications satellites orbiting the earth. In 1973 the company displayed a portable satellite earth station at a communications trade show in California. It planned to sell the portable stations to companies in the relatively new and rapidly growing cable television field so they could transmit their programming to a large number of stations in different areas. The stations, in turn, would send the programming to consumers' homes over their cable networks. At the time, however, observers told Scientific-Atlanta executives that satellite transmission of cable television programming would take place only in the distant future.
These predictions proved incorrect and as the cable television industry boomed in the mid- to late 1970s, Scientific-Atlanta grew with it. The company's profits ballooned by 40 percent a year from 1972 on as Scientific-Atlanta came to dominate the market it had largely pioneered. In 1976, as sales rose to more than $45 million, the company greatly expanded its manufacturing, laboratory, and office space at its headquarters. It sold two-thirds of the 3,000 satellite earth stations purchased by cable companies during the 1970s, enabling its clients--broadcasters such as Home Box Office (HBO) and Showtime/The Movie Channel--to become pillars of the cable broadcasting industry. Scientific-Atlanta's strength in satellite earth stations helped to enhance its overall sales of cable television equipment, and the company also began to market other components necessary to operate a cable television system.
In addition to its satellite products for the cable industry, Scientific-Atlanta manufactured testing and measuring devices for telecommunications, industrial, and laboratory use. The company added to its instrumentation operations when it acquired the San Diego-based Spectral Dynamics Corporation, a manufacturer of scientific devices, in 1978 for $17.4 million. Spectral Dynamics brought with it European sales subsidiaries in Germany, France, England, and the Netherlands. With these additions, Scientific-Atlanta boasted a sales network that covered 40 countries and was supported by a worldwide service network that adjusted and repaired its instruments. Both Scientific-Atlanta and Spectral Dynamics relied on continual research and development to bring new products to market, thereby enhancing market share and fostering company growth.
By the start of 1979 Scientific-Atlanta employed 2,700 people. That year the company also introduced Homesat, a subsidiary formed to market satellite equipment to homeowners who lived in areas too remote to receive adequate television reception.
In addition to its two main areas of operation--communications and instrumentation--Scientific-Atlanta also entered the field of home security and energy management during the 1970s. The company marketed wireless home alarm systems and provided equipment to utilities that enabled them to monitor home energy use.
By the dawn of the 1980s Scientific-Atlanta had become the world's largest supplier of satellite earth stations.
In the set-top arena, Scientific-Atlanta enjoys 100% market share with Time Warner and Cablevision, while Motorola has 100% share with Comcast. The vendors have split accounts at Adelphia, Charter Communications and Cox.
On November 18, 2005, Scientific Atlanta announced that it would be purchased by Cisco Systems in a US$6.9 billion cash deal. On February 25, 2006, Cisco Systems announced that it had completed acquisition of Scientific Atlanta in a cash deal that paid $43 per share. The total cash value of the deal was roughly US$7 billion, or US$5.1 billion net of Scientific Atlanta's cash balance, and also about US$5.1 billion over their 2005 shareholders' equity. In its fiscal year 2005, Scientific Atlanta earned $1.36 per common share (diluted).
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