Comsat earns 8 cents a share analysts had expected more

First stock buyback being considered

Satellite services

July 21, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Comsat Corp., a Bethesda-based provider of satellite services, said yesterday that it is considering its first stock buyback program as it reported second-quarter earnings of $4.1 million.

For the comparable quarter in 1997, Comsat reported a net loss of $10.3 million, which included results from discontinued entertainment and manufacturing operations.

The earnings -- 8 cents per diluted share vs. a loss of 21 cents in the year-earlier quarter -- were below analysts' estimates.

"A stock repurchase program is on the company's list for capital-allocation options; it's at the top of the list," Betty C. Alewine, Comsat's president and chief executive, said yesterday.

The buyback would be the first for the company, which owns 18 percent of Intelsat, the world's largest communications-satellite network.

Comsat shares fell $1.125, to $32.8125.

Philip Wohl, an analyst with Standard and Poor Equity Group in New York, downgraded his rating on the shares from "hold."

"Comsat came in under the earnings estimates," Wohl said. "We expected 10 cents, it gave us 8 cents. Two cents may not sound like much on the surface, but we're talking about a big gap.

"It's almost like this company is treading water."

Comsat had overall revenue of $151.1 million, a 6 percent increase over the $142.4 million in revenue for the 1997 quarter.

Earnings before interest, taxes, depreciation and amortization totaled $76.5 million, up 12 percent from $68.3 million in the 1997 period.

For the six months, earnings were $7.9 million, or 15 cents a share, vs. a loss of $$15.6 million, or 32 cents a share, in 1997. Revenue was $295.8 million, up 7.2 percent from $276 million the previous year.

"There's still obviously more to do to enhance shareholder value," Alewine said. "We must grow gain market share and keep the profits."

Pub Date: 7/21/98

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