>>Gilat stock craters after earnings warning
(UPDATE: Recasts, updates stock price, adds details, analyst comments)
NEW YORK, March 12 (Reuters) - Israeli communications firm Gilat Satellite Networks
Ltd. (NasdaqNM:GILTF - news) on Monday said its earnings this year and next would be
far short of what Wall Street expected because of the economic slowdown, sending its stock
into a tailspin that erased nearly half its value.
Shares of Gilat, whose businesses include earth-to-space communications stations and
satellite Internet access, dropped $15-1/4, or more than 48 percent, to $16-7/16 on
Nasdaq, where it was the No. 2 percentage loser in mid-afternoon trading.
Shares of General Electric Co. (NYSE:GE - news), which owns 20 percent of Gilat, were
also down $2.61 to $41.20 on the New York Stock Exchange, a decline of nearly 6
percent.
Before the start of trading, Gilat reported fourth-quarter 2000 earnings that were roughly in
line with Wall Street expectations. But it warned that earnings for 2001 and 2002 would miss
earlier targets by a wide margin, blaming its new, less optimistic outlook on reduced and
delayed orders.
The Petah Tikva, Israel-based company now expects to earn $25 million, or $1 per share, in
2001, and $50 million, or $2 per share, in 2002. Analysts on average had expected $2.43
per share in 2001 and $3.57 in 2002, according to research firm First Call/Thomson
Financial.
Fourth quarter 2000 earnings, excluding charges, totaled $19.4 million excluding one-time
charges, or 82 cents a share, down from $23 million, or $1 per share, a year earlier.
Analysts polled by First Call had expected fourth-quarter earnings of 83 cents a share.
Including charges related to acquisitions and the write-down of investments in other
companies, the company reported a net loss of $10.2 million, or 44 cents per share,
compared with a loss of $15.8 million, or 75 cents per share, a year earlier.
Goldman Sachs analyst Elan Zivotofsky, who on Monday cut his rating of Gilat to market
performer from the recommended list, said: ``The earnings for the fourth quarter were in line, but management's guidance for
2001 was significantly below expectations.''
Gilat Chairman and Chief Executive Yoel Gat said in a statement that reduced and delayed orders caused the revised outlook.
Gilat's Spacenet subsidiary, based in McLean, Va., provides two-way satellite-based communications.
The profit warning came days after its StarBand joint venture with Microsoft Corp. (NasdaqNM:MSFT - news) and EchoStar
Communications Corp. (NasdaqNM:DISH - news), which provides satellite Internet access, withdrew its initial public offering.
StarBand pulled the offering on Friday, citing ``changed circumstances in the securities markets.'' <<
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