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Melville defense contractor repurchasing $150M of stock

Fred Kornberg of Comtech

Fred Kornberg of Comtech Photo Credit: Alejandra Villa

The Melville-based defense electronics contractor Comtech Telecommunications Corp. says it has completed a $100 million stock repurchase program, and it is now ready to embark on another share buyback, this time for $150 million.

"The company intends to immediately begin repurchasing additional stock pursuant to this new repurchase authorization" by the company board, Comtech said.

A buyback can strengthen a stock by increasing investors' earnings per share.

"Our decision to adopt a new $150 million stock repurchase program reflects our belief that our stock represents an attractive investment opportunity," Fred Kornberg, president and chief executive, said in a Thursday news release.

The company had about $588 million of cash and cash equivalents as of its April quarterly report, and is using that money to buy back its stock. It also hopes to use some of the money for "strategic acquisitions that we believe will drive long-term growth and shareholder value."

Comtech has been forced to diversify by seeking acquisitions in recent months, after it disclosed that its profits and sales were down sharply; and said it expects to do "significantly" less business with one of its mainstay customers, the U.S. Army.

News of the military contracting setback came in Comtech's report for the three-month period ended April 30. Net income for that quarter was $14.3 million on sales of $131.1 million. That compares to $21.8-million income on sales of $216.3 million for the same quarter last year. This quarter's income of $0.47 per diluted share contrasted with the year-ago quarter's $0.67.

The company saw declines in both its mobile data communications and radio frequency microwave amplifiers segments.

 

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