Ottawa Citizen

Com Dev results don’t impress investors

- BY BERT HILL

Com Dev Internatio­nal beat analyst sales forecasts by a wide margin in the latest quarter, but investors weren’t impressed yesterday.

The stock dipped as much as three per cent to $3.53 in Toronto Stock Exchange trading. It traded as high as $6.05 last August.

The Cambridge, Ont., satellite technology company, with design operations in Ottawa, delivered sales of $54.2 million in the second quarter ended in April, 40-per-cent higher than an year ago and well above analyst expectatio­ns of $46.1 million.

It turned a profit of $2 million, matching analyst expectatio­ns, and a big improvemen­t over a loss of $1.4 million a year earlier.

One possible concern for investors was that new orders of $42 million were about half that of a year earlier. The business backlog of $120 million was down from $133 million a year earlier.

Com Dev said that it expects sales will rise 15 per cent to 20 per cent this fiscal year, a target that some analysts believe is conservati­ve.

It said profit margins were hit by the costs of starting a new U.S. operation in California and a review of past stock option granting practices. It said some options were granted below market rates, but none were cashed and the company won’t have to restate results.

Paradigm Capital analyst Barry Richards said, “We expect the stock to break out on beat earnings leverage in the second half of 2008 as the U.S. operations reaches maturity.”

Wellington West analyst Robert Winslow, who also has a buy recommenda­tion on the stock, said, “We believe Com Dev is in the middle innings of a global satellite market recovery that stands to offer significan­t growth opportunit­ies for at least the next two or three years.”

In Ottawa, Com Dev is developing equipment that will be used on an Internatio­nal Space Telescope satellite to be launched in 2013. Former Mosaid chief executive George Cynwar was recently appointed to lead the Ottawa-based operations of Com Dev’s Internatio­nal operations.

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