From Forbes magazine, May 3, 1999

HERE IS A WAY to ride the broadband wave without buying a moneylosing company like At Home Corp. Horsham, Pa.-based General Instrument (NYSE: GIC) controls 60% of the settop cable box market. Its new boxes will have high-speed modems inside that allow subscribers to surf the Web, get e-mail, play games, order videos on demand and make telephone calls. So far Cox Communications, TCI and Time Warner have begun offering General Instrument’s digital boxes to customers.

George Hunt, who follows the cable business for Wachovia Securities, estimates that General Instrument will sell 3 million digital boxes this year, up a third from last year. Sales should rise to $ 2.15 billion and earnings will climb 17%, to 93 cents, in 1999. He predicts even stronger results in 2000. General Instrument’s biggest competitor is Scientific Atlanta, which has less than half its digital market share.

At $ 35, the company sells for a steep 44 times trailing earnings. But note that General Instrument owns 4.5 million shares of Broadcom Corp., a high-flying Internet chip stock, and 2.9% of an interactive TV services company, Worldgate Communications, which is slated to go public soon. Hunt says these two investments are worth $ 5 per General Instrument share.