NextLevel Gets $4.5 Billion in Set-Top Box Orders

CHICAGO — NextLevel Systems Inc. said it has obtained $4.5 billion in orders from nine cable operators for a new generation of set-top boxes that will bring higher-quality TV pictures, high-speed Internet services and interactive services into the home.

Tele-Communications Inc., Time Warner Inc. and the other cable companies will get the right to buy warrants to purchase 16% of NextLevel for ordering 15 million set-top boxes at a price of $300 apiece over the next five years. Next Level will also swap an additional 10% of its equity for part of TCI’s satellite distribution network.

The order is the biggest yet for the advanced boxes by cable companies, which could buy 25 million of them over the next few years. It puts NextLevel ahead of rivals such as Scientific-Atlanta Inc. for the equipment that will allow consumers to order movies, make travel arrangements and access the Internet over cable lines.

“This is the launching spot for the cable set-top box boom,” said Jeffrey Pittsburg of Goldis-Pittsburg Institutional Services, which has a “very strong buy” rating on NextLevel.

The Chicago-based company’s shares rose $2.69 to close at $17.69 on the New York Stock Exchange in trading of 4.9 million shares, quadruple the three-month daily average. Analysts said the cable operators stipulated that warrants, which can be purchased for about $15 a share, be part of the deal so they could take part in any upside in NextLevel’s stock resulting from the industry’s support of the manufacturer’s box.

The contracts give a huge boost to the firm, which has struggled since it was created by the breakup of General Instruments Corp. this year.

NextLevel, which makes equipment for the cable and satellite television businesses, plans to change its name back to General Instruments. It also named Edward Breen, currently its president and acting chief executive, as chairman and CEO.