Orbcomm Inc. (ORBC) reported a second-quarter loss of $0.4 million or 1 cent per share, which was narrower than the Zacks Consensus Estimate of a loss of 3 cents per share. The company incurred a loss of $1 million or 2 cents per share in the prior-year quarter.
Total revenues for the reported quarter were $6.8 million, a decrease of 1.5% year over year. However, segment wise, the most important Service segment reported a solid growth of $6.7 million, up 16.7% year over year. This was primarily due to an encouraging billable subscriber communicator addition. At the end of June 30, 2009, the company had more than 483,000 billable subscriber communicators, up 14.9% from the year-ago quarter. Management is expecting this figure to surpass 500,000 by the end of this week, representing a significant milestone for the company. A key advantage for Orbcomm over its rivals is its ability to expand the proportion of OEM subscribers to overall billable subscriber communicators. OEM growth is important as it provides strong service revenue streams for the company.
On the other hand, Product sales during the quarter declined by a massive $1.1 million, compared to the same quarter of the previous year. Revenues from this segment were just $0.05 million, compared to $1.12 million in the prior-year quarter.
Costs and expenses, during the quarter was $7.9 million, an increase of $0.2 million from the prior-year quarter. However, excluding higher depreciation charges and non-recurring in-orbit insurance costs, total costs and expenses declined 8.5% year over year. EBITDA in the same quarter was $960,000 compared to a negative $624,000 in the year-ago quarter. Cash and cash equivalents, at the end of the second quarter was $62.9 million, compared to $75.4 million in the prior-year quarter.
Orbcomm is a leading provider of satellite data communications. The company is the sole commercial mobile messaging system provider that is optimized for narrowband communications enabling efficient use of valuable wireless spectrum. While the satellite business as extremely competitive, not to mention the low margin and expensive operations, the barriers to entry for such services are also substantial.
Orbcomm received the approval of Federal Communications Commission for its new ORBCOMM Generation 2 (OG2) satellite constellation and supporting Automatic Identification System (AIS), a maritime tracking signal receiver. During the reported quarter, the company received a shot in the arm as Digi International Inc. (DGII) becomes a manufacturer of Subscriber Communicators for Orbcomm’s global M2M (machine-to-machine) network. Digi has acquired MobiApps Holdings, a developer of M2M communication products for Orbcomm’s satellite network.
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