Comsat Corp. said yesterday that Chief Executive Officer Bruce L. Crockett resigned, as the Bethesda satellite company also announced the latest in a series of earnings disappointments that it warned would stretch into late 1996.
Crockett, who had come under fire for sagging earnings and a lagging stock, said he was leaving to pursue unspecified "other business interests." The company said he will be replaced by Betty C. Alewine, 48, who has been in charge of the company's biggest business unit. She joined Comsat in 1986.
"It would appear to be total package and not stand-alone events," Burnham Securities analyst David Liebowitz said of the changes. "But without knowing the details, one doesn't know."
Comsat said it earned $5.8 million during the three months that ended June 30, or 12 cents a share, on revenues of $232.3 million. That was down 74 percent from the second quarter of 1995, which added up to 46 cents a share.
Comsat spokeswoman Janet Dewar blamed three major factors for the earnings shortfall.
First, Comsat owns 81 percent of Ascent Communications, a former Comsat subsidiary that owns entertainment assets including the Colorado Avalanche hockey team and the NBA's Denver Nuggets. Ascent said Thursday that it lost $6.4 million in the quarter, citing operating losses from the Nuggets and the Avalanche, who won the NHL's championship and with it the 1996 Stanley Cup.
Second, Comsat has been hurt by tougher competition in its satellite telephone business, which Dewar said is a higher-end mobile telephone market keyed toward ship-to-shore phones and international travelers visiting places too remote for ordinary phones or even cellular service.
The company will be "streamlining" prices and starting a new service called Planet 1, Dewar said. Planet 1 will be a much smaller, lighter portable phone than Comsat has offered in the past, she said, but the company warned that Planet 1 start-up costs would depress earnings during the last two quarters of the year.
"It will lower near-term earnings, but we think it will bring some customers we've lost to the competition back," Dewar said.
Third, she said the company continues to lose money on its venture in Russia. She said Comsat has shaken up the local management of that business and expects results to turn around, but concedes that the turnaround has come slower than expected.
The stock market was unimpressed by the report, which was well below expectations. Comsat shares fell $1.75 to $21.125 in very heavy trading.
Crockett had acknowledged last year that he would do "whatever we have to do" to raise the stock, but his results were mixed.
"The key thing to remember here is that the stock has bungee-jumped big-time," Liebowitz said, pointing to a jump from about $16 in January to $33 in May.
"The most perplexing part is that the company is in some businesses that are perceived as being growth-oriented, yet the numbers going on the board are basically underwhelming," he ** said.
"Investors who thought the company had finally broken out of its shell and the good times were with us were blindsided."
Comsat's biggest institutional stockholder in Maryland, however, said the key is less cleaning up small operating problems than continuing to restructure the business, possibly by selling more of Ascent or making other asset sales.
"What we're really focused in on is how quickly management can unlock some of the hidden value," said Jay Leopold, an analyst for Baltimore-based Legg Mason Capital Management. Legg Mason owns 267,000 Comsat shares, according to the most recent federal reports.
The company said it has received a report from Merrill Lynch on restructuring options. Comsat will announce its conclusions after reviewing Merrill Lynch's report, it said.
Leopold said Comsat also has to continue its efforts to restructure Intelsat, the international treaty organization that manages the world's largest communications satellite network. Comsat owns 19 percent of Intelsat.
Pub Date: 7/20/96