Comsat posts $6.6 million earnings Half related to merger with Lockheed Martin

Satellite communications

October 20, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Comsat Corp., the satellite communications company that is preparing to merge with Lockheed Martin Corp., said yesterday that it posted third-quarter earnings of $6.6 million, or 12 cents per diluted share. In the same quarter last year, Comsat suffered a net loss of $20.8 million, or 41 cents per diluted share.

Bethesda-based Comsat had $158.4 million in revenue during the quarter, which ended Sept. 30. This marks a 9 percent increase from the $145.3 million that Comsat took in during the third quarter of 1997.

The earnings included $3.5 million in costs related to the merger with Lockheed Martin, which was announced Sept. 20 and must undergo a lengthy approval process.

The company's Comsat International division posted an operating loss of $20.1 million, compared with a $3.9 million loss in the same quarter last year. Comsat said that $14 million of the loss was due to a write-down of investments in the former Soviet Union.

Comsat President and Chief Executive Officer Betty C. Alewine said in a statement that the write-down "was an appropriate step for [Comsat], given the economic realities of doing business today in Russia."

Revenue from network services was up 22 percent. The company's satellite services division had $33.1 million in operating income on $112.5 million in revenue. In last year's third quarter, the satellite division had operating income of $29.1 million on $110.2 million in revenue.

"The core business looks really good," said Marc B. Crossman, an analyst with CIBC Oppenheimer Corp. in New York. "If you back out the merger-related costs, they hit my numbers right on the head."

The company also said yesterday that it has named Global One Vice President James J. Welch president and general manager of Comsat International. Welch will direct Comsat's efforts to sell digital communications services to corporate clients in emerging markets. Comsat International operates in eleven foreign countries, including Mexico, Russia and China.

While at Global One, a joint venture of Sprint Corp., France Telecom and Deutsche Telekom AG, Welch served as an area manager for Russia, India, the Middle East and Africa.

The Comsat International position had been held on an acting basis by Gerry Allen, who will remain with the division as vice president of marketing.

"I've been waiting for them to close that spot for a long time," said Crossman.

Comsat stock fell 15.63 cents yesterday, closing at $34.4375.

Pub Date: 10/20/98

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