Globecomm warns of tough fiscal 2013 as quarterly profits rise

Globecomm’s fourth-quarter net profit has more than tripled as infrastructure revenues were boosted by work on a major government contract.

The satellite operator reported net income of $7.1 million, compared with $2.2 million in the fourth quarter of 2011, but Globecomm (Haupagge, USA) attributes the increase largely to “a change in fair value of the ComSource earn-out”.

Globecomm acquired software developer ComSource in April 2011 for $20 million, funding $18 million of the transaction through a credit facility with Citibank.

Globecomm’s fourth-quarter net profit has more than tripled as infrastructure revenues were boosted by work on a major government contract.

The satellite operator reported net income of $7.1 million, compared with $2.2 million in the fourth quarter of 2011, but Globecomm (Haupagge, USA) attributes the increase largely to “a change in fair value of the ComSource earn-out”.

Globecomm acquired software developer ComSource in April 2011 for $20 million, funding $18 million of the transaction through a credit facility with Citibank.

Indeed, in the fourth quarter of 2011 it faced charges relating to the earn-out and says that when all charges and gains are stripped out earnings per share decreased by 35% between the fourth quarter of 2011 and the recent quarter.

Revenues from infrastructure solutions soared 53% to $54.7 million, with US government contracts largely responsible for the gains, but service revenues slipped 4.6% to $50.1, hit by the reduction of US troops from Afghanistan and Iraq.

Armed forces deployed overseas represent a major source of business for the operator, which cautions investors that ongoing troop withdrawals may have an impact on its revenues next year.

“Due to the uncertainty surrounding the US government’s budget environment, including the reduced Afghanistan commitment, fiscal 2013 will be a challenge to improve on the excellent results of fiscal 2012,” said David Hershberg, Globecomm’s chief executive and chairman, in a statement.

The operator remains optimistic about other endeavours, including a managed services deal in the maritime sector with Ericsson, the Swedish telecoms giant, and the launch of a new platform called Tempo, which allows enterprise customers to provide interactive streaming media to desktops and mobile devices.

“Coming off a record year in fiscal 2012, we are excited about the investments we have made to develop our commercial market verticals,” said Keith Hall, Globecomm’s president and chief operating officer. “Key highlights include … our contract with Ericsson to provide machine-to-machine managed services to up to 400 vessels.”

Globecomm says it has ample liquidity to execute its business plan, with $58 million in net cash, and remains on the lookout for “additional strategic acquisition opportunities”.