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PanAmSat Posts Sharp Rise in Profit

Kevin Burke

PanAmSat(SPOT Quote), a maker of satellite communications equipment, reported a sharp rise in fourth-quarter earnings Tuesday but said revenue fell from year-ago levels because of slack demand for its video services.

The Wilton, Conn.-based company posted a net profit of $23.5 million, or 16 cents a share, up from $3.2 million, or 2 cents a share last year. Wall Street analysts, on average, were expecting the company to earn 13 cents a share, according to Thomson Financial/First Call. For the full year, PanAmSat said it earned $85 million, or 57 cents a share, nearly tripling the $30.6 million or 20 cents a share it earned last year. The results include an extraordinary loss on the early extinguishment of debt.

Like a number of its peers, PanAmSat has been hurt by a massive capacity buildup in the satellite market in recent months. Total revenue for the quarter fell to $196.8 million from $203.7 million. Analysts were expecting revenue of $200.8 million. Overall video services revenues decreased by 3.2% to $127.6 million in the fourth quarter, compared with $131.8 million a year earlier.

Looking ahead, the company said its growth strategy for 2003 will focus on three main areas including consolidation, service expansion and technology development. "Our growth strategy will not rely on one transaction or the launch of a new satellite or technology -- we're coming at it from many angles," said Joe Wright, the company's president and chief executive officer, in a prepared statement.

The company is projecting first-quarter results of 13 cents to 17 cents a share on revenue of $190 million to $200 million. For fiscal 2003, PanAmSat expects to earn 52 cents to 62 cents a share on revenue of $790 million to $820 million. Consensus estimates call for earnings of 13 cents and 58 cents, respectively, while revenue is targeted at $205 million for the quarter and $829 million for the year.

The company's shares were up 31 cents, or 2%, at $15.48 around midday.