In what may be its final quarterly report before being consumed by Cisco Systems (NASDAQ:CSCO) come April, Scientific-Atlanta (NYSE:SFA) posted financials that came in light on the top but heavy on the bottom.
The cable-box maker earned $0.44 a share before one-time charges, squeaking past Wall Street's expectations by a penny, as sales rose by just 12% to hit $495.2 million. That was a huge miss on the top line -- analysts were expecting sales to climb 16% higher.
Yet Scientific-Atlanta's shares didn't get socked at all on the news. That's because two months ago, the company agreed to be acquired by Cisco at $43 a share. The deal will cost Cisco about $5.3 billion after accounting for Scientific-Atlanta's cash-rich balance sheet, and it would take a lot to derail the deal at this stage. In fact, you can probably just hit the snooze button if Scientific-Atlanta has to report its next quarter in April before the deal is complete.
Cisco was attracted to Scientific-Atlanta because the latter is a major player in the digital home movement. Cisco's networking strengths were already geared toward the convergence of data, voice, mobility, and video in what it called "the infrastructure of the future," and it was weakest in the video category. By the time the deal closes in three months, that will no longer be the case.
In fact, Cisco will be placing itself ahead of the curve. Everyone from Google (NASDAQ:GOOG) to Apple Computer (NASDAQ:AAPL) has started selling video streams from its sites, and even cable giant Comcast (NASDAQ:CMCSA) is looking to make its on-demand video offerings more financially feasible by streaming them with embedded ads.
That all points to why Cisco is doing the right thing by hooking up with Scientific-Atlanta -- the marriage will ensure that Cisco can command the infrastructure behind the more enlightened (and instantly entertaining) home of the future.
Longtime Fool contributor Rick Munarriz does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
