A pre-Halloween haunting?

September 24, 2003

In 2000, two of cable set-top manufacturer Scientific-Atlanta’s (SFA) largest customers were Charter Communications (CHTR) and Adelphia Communications (ADELQ.PK) , both of which are facing a series of criminal charges and investigations by the SEC and Justice Department, not to mention shareholder lawsuits. The question now is whether those problems are likely to have any impact on SFA. In the 10-K it filed on Tuesday, Scientific-Atlanta disclosed that a federal grand jury had handed down an indictment against Charter in July 2003 that focuses, in part, on Charter’s advertising agreement with SFA. The K also notes that one of the charges facing Adelphia concerns a January 2001 agreement between the two companies. SFA further discloses that its records have been subpoenaed and that SFA employees have been interviewed by government investigators, which at the very least, is taking time away from running the business. The company said it is cooperating with both investigations.

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