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Gilat Satellite falls to Earth

The company, a maker of equipment that transmits and receives satellite signals, announces gloomy earnings, prompting investors to halve its value.

    Gloomy earnings forecasts prompted investors to halve the value of Gilat Satellite Networks on Monday.

    The company, a maker of equipment that transmits and receives satellite signals, reported fourth-quarter earnings of $19.4 million, or 82 cents a share, excluding charges. That compares with last year's earnings of $23 million, or $1 a share. Revenue increased to $175 million from $109 million. Including the charges, the Israel-based company reported a loss of 44 cents a share.

    Wall Street expected the company to post earnings of 83 cents a share, the consensus estimate of nine analysts surveyed by First Call.

    Gilat also significantly cut its forecast for earnings over the next two years because of slower purchases by U.S. and international customers and tighter access to equity markets. As a result, the company expects to make $1 a share for fiscal year 2001 and $2 a share in 2002. Analysts previously forecasted per-share earnings of $2.43 and $3.57, respectively.

    "Like other businesses in the technology sector, Gilat is facing challenging economic conditions which have reduced or delayed orders from our target segments," Gilat CEO Yoel Gat said in a statement.

    The company received a blow on other fronts after Starband, a joint venture between Gilat, Microsoft and EchoStar Communications, pulled its $287.5 million initial public offering last Friday.

    Starband provides high-speed Internet access for consumers in the lower 48 states via satellite. The company announced Monday that it now serves about 25,000 U.S. subscribers, but a portion of these are non-paying test subscribers. Tim O'Neil, an analyst at Wit SoundView, estimates that the company currently has 12,000 paying customers. Starband spokesperson Sandy Colony says that Starband expects all of its subscribers will be paying customers by June.

    The Mclean, Va.-based company attributed the withdrawal of its IPO to gloomy conditions in the U.S. equity markets.

    On the bright side, Starband said Monday that it has forged a relationship with the National Rural Telecommunications Cooperative (NRTC), an organization of about 1,000 U.S. electric and telephone utilities that helps people in rural parts of the country obtain telecommunications services.

    The NRTC will offer Starband's services to its customer base of about 20 million people in the United States.