Tessco named distributor for phone net Sparks company wins exclusive agreement

October 20, 1995|By Kim Clark | Kim Clark,SUN STAFF

Tessco Technologies Inc., the Sparks-based distributor of cellular telephone equipment, announced yesterday that it had won an exclusive agreement to distribute equipment for the first satellite telephone network to serve North America.

Tessco said it will be the sales agent for American Mobile Satellite Corp.'s Skycell satellite telephone service, which will begin Nov. 1.

Skycell's telephones will be the first to provide seamless coverage throughout the continent and reach more than 200 miles offshore.

Robert J. Barnhill Jr., Tessco's chief executive officer, said he couldn't predict the effect that the distribution of the $3,000 telephones would have.

"No one knows how big satellite telephones are going to be," he said.

But he said he expects the telephones to sell well to companies such as truckers or shippers at sea who need to be in constant communication with others. In addition, he said, the telephones can serve as a link for people or buildings in remote areas, such as mountaintop cabins.

Tessco also announced that it earned record profits for a second consecutive quarter.

Tessco said it made $985,000 on sales of $22 million in the quarter that ended Sept. 29. In last year's second quarter, Tessco earned $534,000 on sales of $18.2 million.

Tessco's stock closed up $1 at $26.50 in Nasdaq trading yesterday.

Kevin Cory, who follows Tessco's stock for Ferris Baker Watts in Baltimore, said that, while the deal to distribute the United States' first satellite telephones sounded good, he didn't think it would have much of an impact on Tessco in the next year or two.

In addition, he said, while he considers the company well run, its stock price is so high that he is not recommending purchases until the price-to-earnings ratio, which topped 31 yesterday, drops to the low 20s.

The price-to-earnings ratio, the number by which one multiplies a pTC company's expected earnings per share to reach its stock price, is a widely watched indicator of investors' expectations.

High ratios indicate that investors are willing to pay a premium for the stock in the hopes that future earnings will catch up with their expectations. Low ratios are often viewed as signs that investors believe earnings will fall.

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