Globecomm reports lower sales and profits
Globecomm Systems Inc., a Hauppauge-based maker of satellite communication devices, Wednesday reported lower sales and profits for the last quarter due to a drop in government contracts as the United States continues to reduce its presence in Iraq and Afghanistan.
The company's revenue fell to $79.7 million for the quarter ended Dec. 31, a 16.7 percent decrease from the same period in 2011. Globecomm also reported a decline in profits as the company made $3.8 million, or 17 cents per share, compared to $9.3 million in the year-ago period.
"This has been a challenging year for the company due to a number of delays and uncertainties in awarding U.S. government contracts," chief executive David Hershberg said in a news release.
The earnings report comes a month after Globecomm, which has a market value of $281 million, revised down its sales estimates for the year. The company has been affected by uncertainty over whether Congress will be able to come to a budget agreement to avoid a series of automatic cuts -- including a chunk that would hit defense spending.
It's difficult to assess how Globecomm will be impacted by the government deadlock until there is more clarity on the federal budget, said Gregory Burns, an equity analyst with Sidoti & Co.
Last month, Globecomm announced that it had hired an investment bank to explore "strategic alternatives," indicating it was considering a sale. Shareholders had also been urging the company to explore a sale to increase value.
Burns said he does not expect Globecomm's quarterly earnings to affect any interest that possible buyers would have.
"Nothing they reported tonight would change the long-term value that a buyer would see in the company," he said.