Frequency Electronics profit rises on tax benefit

Frequency Electronics Inc., a Uniondale maker of synchronization devices used in missiles, global positioning systems and satellite payloads, Thursday reported lower third quarter revenue, but a higher profit because of a tax benefit.

Revenue for the quarter ended Jan. 31 fell 5.2 percent to $12.8 million. But net income rose to $338,000, or 4 cents per diluted share, compared with $282,000, or 3 cents per diluted share, in the year earlier period.

Shares of FEI slipped 1 cent to close at $10.99 Thursday on the Nasdaq Global Market. The stock has climbed nearly 8 percent in the past 12 months.

“FEI was nominally profitable this past quarter due to tax benefits,” board chairman Joel Girsky said in a statement. “We did not achieve the operating profit we anticipated primarily because of continued postponements and delays in new satellite orders.”

Girsky said the company has instituted cost reductions and expects to earn an operating profit in the current quarter ending April 30.

He cited three factors driving a slowdown in commercial geostationary communication satellites: revised business plans related to emerging technologies; significant launch delays; and difficulties financing orders.

In September, the company reached an agreement to expand its board of directors and appoint two new members designated by an activist hedge fund. In response, that fund, Atlanta-based Privet Fund Management, agreed to call off a proxy campaign to elect its slate of directors.

That agreement also bars Privet from acquiring more than 14.9 percent of the company’s outstanding common stock.

The company has about 430 employees worldwide, according to its latest annual report.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.