TV Set-Top Maker to Cut Work Force

Scientific-Atlanta Inc. said Wednesday that it eliminated 1,300 jobs in Mexico, or 16% of its staff, because of declining demand at the second-largest U.S. maker of television set-top boxes.

The company trimmed production at its plant in Juarez, Mexico, to reduce the work force to 6,700 and may cut more jobs, spokesman Paul Sims said.

Scientific-Atlanta, second to Motorola Inc. in the set-top box market, has seen sales decline as cable operators sign up fewer subscribers for digital-TV service, which features hundreds of channels. The majority of the company’s revenue comes from a few large cable customers, including AOL Time Warner Inc., analysts and investors said.

The company’s customers “were having their own problems and having to manipulate their own inventories,” said Jeanie Wyatt, chief executive of South Texas Money Management, who manages more than $100 million and sold her Scientific-Atlanta shares.

Scientific-Atlanta shares rose 17 cents, or 1.2%, to $14.24 on the New York Stock Exchange. They have declined 68% in the last year.

The firm’s shipments of digital set-top boxes are expected to decline this quarter partly because of sagging demand from AOL Time Warner’s cable unit, said Merrill Lynch & Co. analyst Tal Liani, who has a “near-term reduce/sell” rating on Scientific-Atlanta shares.

The AOL Time Warner cable business, second-largest in the U.S., accounts for about 51% of Scientific-Atlanta’s set-top box shipments and 22% of the company’s revenue, Sims said.