In its latest financial results issued June 8, Comtech reported $131 million in revenues — 11 percent below Wall Street guidance — and EBITDA of $29 million, which beat projections by 5 percent. Comtech said its mobile data segment’s third-quarter performance was disappointing, even after executives made efforts to lower expectations throughout the year.

    Raymond James analyst Chris Quilty said that he sees a bright side to Comtech’s results. “Comtech’s gross margin saved the day and its weakness resulted from vendor component delays, however, the postponed shipments are expected to ship during the fourth quarter of 2011. Mobile Data revenues were 32 percent below our estimate, but we believe roughly $30 million was delayed,” said Quilty. “We expect investors to give Comtech a pass on weak mobile data results — a segment that has largely been written off. Investors will likely focus on the weak revenue outlook and solid margins of Comtech’s telecom segment”

    Comtech’s telecom sales fell 10.4 percent below targets due to a decline in government orders and a sequential decline in OTH shipments. Quilty believes that the tight congressional budgetary environment played a role in the drop, especially after Comtech telecom reported two straight quarters of growth earlier this year.

    “Sales margins were in-line with expectations at 24.7 percent against our estimate of 24.8 percent, which puts Comtech on track to achieve its full-year target of low 20s EBIT margins,” said Quilty.

Comtech management warned that its fourth quarter 2011 sales are likely to be ‘slightly higher’ on a sequential basis — a disappointment relative to analysts’ forecast of 18 percent sequential growth, according to Quilty. “Analysts also will continue to grumble about Comtech’s merger and acquisition strategy, which has never quite been accepted by investors.”