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Comtech at 'inflection point,' ready to grow, new CEO says

Comtech CEO Michael Porcelain.

Comtech CEO Michael Porcelain. Credit: Business Wire

Comtech Telecommunications Corp. is at a turning point, the company's new chief executive said, two weeks after a truce was declared in a proxy battle with an institutional investor.

Michael Porcelain, who took the reins as CEO on Dec. 31, said in an interview that the Melville company's is at "an inflection point" and its leading businesses — satellite earth stations and Next Generation-911 systems — are poised for rapid growth.

"We have seen tremendous business momentum," said Porcelain, 52, citing Comtech's $1.2 billion in unfilled orders and unfunded multiyear contracts. To seize the opportunity, Comtech plans to earmark $30 million for new satellite equipment production facilities in Arizona and the United Kingdom, he said.

The market for satellite communications equipment is forecast to grow from $5 billion to $9 billion by 2029, according to Northern Sky Research, while the NG-911 market is expected to expand from $689 million to $1.7 billion by 2026, according to research firm Frost & Sullivan. .

Many states and municipalities are migrating from analog 911 systems to digital systems that can carry voice, photos, videos and text messages.

In November, Comtech announced a five-year, $125 million cybersecurity training contract the federal government to help secure 911 systems, seen as attractive targets for hackers.

The market for satellite earth station gear will be bolstered by the launch of "thousands" of low-earth-orbit satellites in coming years, Porcelain said.

In the quarter ended Oct. 31, Comtech posted revenue of $116.8 million versus $135.2 million in the 2020 period. Porcelain attributed the lower revenue in part to the COVID-19 pandemic and the withdrawal of troops from Afghanistan by the U.S. government. U.S. soldiers in Afghanistan employed satellite communications equipment.

Porcelain, a Long Island native, came to Comtech from bar code pioneer Symbol Technologies Inc. in 2002. He rose through the ranks from vice president of finance and internal audit to chief financial officer to chief operating officer to president in January 2020.

He succeeds Fred Kornberg as CEO. Kornberg will serve as a company adviser and continue as director and non-executive chairman of the board.

Porcelain joins Kornberg on the board of directors, along with Mark Quinlan, co-founder of White Hat Capital Partners LP. White Hat along with another investment firm allied with Comtech management acquired $100 million in convertible preferred stock in October during the proxy battle.

Also joining the board is Wendi Carpenter, a retired U.S. Navy rear admiral, who had been part of the two-person dissident slate nominated by Manhattan investment firm Outerbridge Capital Management LLC, which held about 5% of Comtech's outstanding common shares.

On Dec. 16, the day before the scheduled annual meeting, Outerbridge, which had previously called for the sale of the company, entered a "cooperation agreement" with Comtech.

Under the deal, Outerbridge agreed to support the ascension of Porcelain as CEO and call off its battle for control of Comtech's board, while winning the company's backing for Carpenter to take a board seat.

Shares of Comtech shed 1.3% to close Tuesday at $23.66.

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