There were quite a few unpleasant surprises bundled in with the release of the first quarterly report for the year from

Gilat Satellite Networks

(Nasdaq:GILTF). The company "took" an additional $2 million for one time re-organizational expenses, which were meant to cost only $28 million, but wound up totaling $30 million. It also increased its bad-debt reserves by $20 million, striking off theoretical losses.

And these weren't the only surprises. The company's reorganization led to the dismissal of 500 workers out of a workforce of 1,900. Until yesterday, there had been no public mention of this fact, or even an allusion to it. Although two months ago Gilat did announce that it was dismissing 275 workers but not 500.

Since dismissal announcements point to distress, and hardly add to a company's reputation or value, Gilat might have been seeking to avoid a repeat of investors' sell orders, which followed similar announcements in the previous quarter, and the negative publicity. For example, after

Comverse Technology

(Nasdaq:CMVT) announced on April 30 of this year that it was to cut 400 out of 6,000 jobs, it hasn't stopped making headlines.

But it seems that although Gilat doubled the number of its dismissals, investors did not hurry to punish it. The company's shares gained 7.2% to $13.1 on May 14, 2001.

But it's Gilat's management and its founders who own many options, who have suffered most from the eroding stock price, which has long passed its peak price of $90.