[Satellite TODAY Insider 12-12-11] While Comtech’s 2012 fiscal first-quarter revenue intake of $113 million easily beat Wall Street’s consensus of $94 million, analysts are raising a flag of caution at the company’s quarterly earnings, which fell 51 percent year-over-year.

   According to its latest financial results issued Dec. 9, Comtech admitted that a $12.5 million merger-termination fee it received during the period could not offset the impact of decreased sales on profits. Most of Comtech’s upside, however, was derived from a temporary blip in the U.S. military’s MTS/BFT programs, which are currently winding down.

The company saw modest core revenue growth of 6.4 percent, reflecting healthy 15.6 percent gains in its Telecom segment. Those gains were partially offset by a 6.4 percent decline in its EF Mobile Data and a 7.5 percent drop in its RF Amplifier business.

   While Comtech affirmed its full-year revenue guidance and boosted its midpoint

EPS forecast, Raymond James Analyst Chris Quilty said that a warning from Comtech’s management that full-year revenues could decline due to weakening orders, adverse global business conditions, increasing U.S. government budget pressures, and related spending delays, provided a shaky outlook for the company in the near-term.

   “Comtech posted decent first-quarter results, and we were pleasantly surprised by the strong revenue and margin performance in the all-important Telecom segment,” Quilty said in a report to Satellite TODAY Insider. “That said, Comtech is facing another year of headwinds in the Mobile Data business, and management has clearly grown more cautious with regard to the company’s growth outlook. We are inclined to believe the stock will trade down on first-quarter results and guidance, but the stock’s attractive valuation and an aggressive buyback program should limit any downside.”

   In September, Comtech received notice from a group of financiers led by MMI Investments that it has nominated two candidates to the company’s six-member board of directors. In that notice, the firm also criticized Comtech’s strategy to kickstart growth through acquisitions. “Returning its cash to shareholders through a special dividend or sharply increased buybacks would be a better use of its capital,” MMI said.

   The investor group withdrew its nominations in November.