Comsat Corp., the Bethesda-based communications satellite and entertainment company, reported the type of quarter that tests investors' patience yesterday, reporting a 28 percent earnings decline while insisting the company's long term plans are on course.
First-quarter earnings came to $22.9 million, or 31 cents a share, down from $32 million in the same quarter a year ago, or 43 cents a share. Revenues rose 4 percent to $207.9 million, compared with $200.5 million in the first quarter last year.
Comsat's stock not only escaped punishment for the steep earnings drop, but showed a 37 1/2 -cent gain to $19.25, indicating that company officials prepared Wall Street well for such a report.
George Dellinger, an analyst with NatWest Securities in Washington, said the results fell within his range of expectations. "The whole year is stacked with costs up front and benefits at the end of the year," he said.
Comsat spokesman Joe Tomkowicz said the results were in line with the company's strategy of de-emphasizing short-term earnings in favor of long-term investments.
"There were tremendous opportunities and we wanted to invest some big bucks," he said. Among the big-ticket investments were the building of a new arena for the company-owned Denver Nuggets basketball team and the expansion of its in-room hotel video business. Those items contributed to a $3.2 million loss in Comsat's entertainment segment.
If anything, the report understated the drop because first-quarter earnings included a $2.2 million gain from the sale of a 50 percent share of a telecommunications venture in Chile. The gain was not reported as an extraordinary item because it was not a core business, Mr. Tomkowicz said.
Mr. Tomkowicz said it shouldn't be too long before investors begin to see some of the returns from the company's heavy investment program. He said the company's chief executive, Bruce Crockett, had assured analysts of better news by the end of this year or early in 1996.