Gilat misses Q4 expectations, revises 2001 forecast

(Telephony) Israel’s Gilat Satellite Networks today reported that its fourth-quarter 2000 earnings missed analyst expectations by one cent and issued a warning that its 2001 results would also fall short of expectations.

The news had a significant impact, as shares of Gilat plummeted in today's trading, dropping $8.125 from an opening price of $22.0625, closing at $13.9375.

Revenues for the quarter ending December 31, 2000 were $174.6 million, an increase of 60% over the same period in 1999. Excluding one-time charges, earnings for the quarter were $19.4 million, or $.82 per share, missing analyst expectations of $.83 a share.

In addition, Gilat reported revenue for the year ended December 31, 2000 of $504.6 million, up from $337.9 million in the year previous. Net income for 2000 was $19.4 million, or $.81 per share, after one-time charges of $29.7 million. Excluding the one-time charges, net income was $49.1 million, or $2.04 per share.

Gilat also lowered its guidance for 2001. The company now expects total year revenue will be about $575 million and net income to be about $25 million, or $1.00 per share. According to Gilat, the revised guidance for 2001 is primarily the result of slowed decision-making with regard to technology purchases by U.S. and international customers and tighter access to the equity markets.

“The landscape has changed. We’ve seen a slowdown in the economy and we’ve seen delays on decisions and rollouts,” said Gilat Chairman and CEO Yoel Gat.

Gilat recently received a line of credit totaling more than $100 million and the company will have more than $220 million in cash at the end of Q1 2001, according to Gat.

“We are on target for a cash-flow break even in Q3 and cash-flow positive in Q4,” said Gat.

Additionally, Gilat is beginning to implement a Q1 restructuring plan that it hopes to have completed by the end of March, said Gat.

The company also said it expects that 2002 results will generate total year revenues of $675 million and net income of approximately $50 million or $2.00 per share.

In separate news, Gilat’s StarBand venture, which now has more than 25,000 subscribers, withdrew its initial public offering late last week in response to the weakened financial markets and is actively pursuing alternative sources of financing.

“With a not very substantial bridge loan from the insiders, which is being considered now, StarBand could move well into the fourth quarter of this year; growing, installing and continuing to perform,” Gat said.

Gilat’s total financial exposure to StarBand will be limited to $75 million dollars, including a bridge loan, said Gat.