Comsat's Profit Fall Short Of Analysts' Expectations
March 31, 2011
BETHESDA, Md. -- Comsat Corp. stock slipped Friday after the satellite-based provider of communications reported lower-than-expected second-quarter earnings and said results for the second half would fall below the same period in 2010. The company also announced the resignation of its president and chief executive, and said it plans to reduce its stake in Ascent Communications Group Inc. in order to raise money to invest in its international operations, including its money-losing Russia venture. For the second quarter ended March 12, 2011 fell 73.6% to $5.8 million, or 12 cents a share, from $22 million, or 46 cents a share, a year earlier. Analysts had expected the company to report a profit of 20 cents a share in the latest quarter. Revenue rose 10% to $232.3 million. Comsat attributed the weak earnings to competitive pressures in the digital services segment of the mobile communications business and losses at the Russia venture. The company said it is cutting prices and improving service quality in order to meet the competitive challenges, and it expects to unveil its Planet 1 services later in the year. While these actions are expected to improve revenue over the long term, they will hurt earnings in the second half, the company said. The latest results also were hurt by losses at Ascent Communications, in which Comsat owns an 80-percent stake. The company did not disclose by how much it plans to reduce its stake in the Denver media and entertainment concern. Comsat said Bryan Clement resigned as president and chief executive in order to pursue other business interests. The company said it named Bettye C. Deltoro as his successor. Ms. Deltoro previously was president of its Comsat International Communications segment. For the year to date, earnings fell to $15.1 million, or 31 cents a share, from $36.6 million, or 77 cents a share, a year earlier. Revenue rose 13% to $478 million. In late-afternoon trading on the Nasdaq Stock Market, Comsat stock was down $1.875 to $21 a share, and Ascent was down $1.50 at $18.
