Gilat Satellite Networks reported second quarter revenues of $51.6 million, an almost 30 percent fall from the previous quarter. The results were dramatically below analysts’ expectations.

Armand Musey, a satellite equity analyst at Salomon Smith Barney, had forecasted Gilat’s second quarter revenues at $70.8 million and called the results “ugly.” Gilat’s dramatic revenue decline is even more marked when compared with the second quarter of 2001, when it reported revenues of $118.2 million. A drop in the Latin American market was cited by the company as a reason for the revenue drop. William Kidd, a satellite equity analyst at Lehman Brothers, said in a research note: “We suspect some of the contract slippage may have been due to some of Gilat’s potential and existing customers opting to hold off until the company resolved its liquidity matters.”

Gilat had operating losses of $23.5 million in the second quarter, again much higher than expected. The Israeli-based satellite operator is trying to restructure around $450 million in debt. Musey added: “The Gilat management has indicated that near-term prospects for restructuring the balance sheet are good. At the same time, the management acknowledged that it continues to face significant challenges including the pushback of several pending deals, weaker than expected financial results, and continued concerns about the company’s long-term viability.” Financial issues will continue to be the focus of Gilat’s management. Tim Perrott, vice president of investor relations at Gilat, told Interspace before the results were announced: “We do recognise … from a financial standpoint that [our] customers want to see our balance sheet in better shape. We recognise the need to bring our capital structure into better line.”

–Mark Holmes