Comsat reports lower earnings But manufacturing showed big gains

April 20, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Comsat Corp. reported lower earnings yesterday for the first quarter of 1996 even as it continued to hint at bluer skies ahead.

The Bethesda-based satellite telecommunications company posted earnings of $9.3 million, or 19 cents a share, down from $14.6 million, or 31 cents a share, in the first quarter of 1995. Revenues increased to $245.7 million, an increase of $37.8 million over $207.9 million in the year-ago quarter, but a $41.8 million increase in costs more than offset the gains.

Bruce L. Crockett, Comsat's president and chief executive officer, put a positive spin on the results. "While we expected lower earnings than in the first quarter last year, we are pleased that on a quarter-to-quarter basis, the trend in revenues and earnings, adjusted for non-recurring items, is positive," he said.

Still, the company continues to show soft earnings in its core international communications business, where profits declined by $2.2 million to $25.5 million amid increased competition and lower prices. Its mobile communications business showed a $4.5 million decline in revenue, but operating earnings increased $1.1 million.

Amid the lackluster results were some bright spots. Comsat's manufacturing business, Comsat RSI, showed significant gains in revenues and earnings. And the company's entertainment business, which it recently spun off as Ascent Entertainment Group, reported a 47 percent gain in revenues and a 43 percent increase in cash flow despite a $4.2 million operating loss.

Jay Leopold, an analyst with Legg Mason Capital Management, cited start-up losses in Comsat's international communications ventures in such places as Russia and the Philippines, and said the weak earnings do not necessarily indicate the company's status.

Mr. Leopold also said Comsat should start to realize gains on some of its current spending later this year, when its Planet 1 satellite telephone service goes into service. The service, which employs a ground station that fits into a briefcase, "looks like a winner," he said.

Pub Date: 4/20/96

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