Troubles in space led Spacecom Communications to report an operating loss of $6.7 million for the second quarter of 2010, compared with an operating profit of $7 million in the same period of 2009.
The company is controlled by Shaul Elovitch's company Eurocom. Two weeks ago it admitted that its communications satellite Amos 5i doesn't have enough fuel to supply continuous service until the launch of a replacement satellite, the Amos 5.
Spacecom had bought rights to the Amos 5i from AsiaSat in January 2010 for $30 million, of which $10 million remain outstanding. It changed the satellite's position in orbit in order to create a client base in Africa ahead of the launch of the Amos 5 in 2011.
But the fact that the satellite has less fuel than originally thought led Spacecom to post a $14 million charge. Also, following the glitch, the Israeli company canceled its commitment to pay AsiaSat a lease fee of $10 million, on top of the $20 million already paid in cash.
For the second quarter of 2010 Spacecom reported an 11.5% increase in revenues year over year to $20.1 million. Company chief financial officer Itzik Shnaiberg says most of the increase in revenues derived from the operation of the Amos 5i satellite starting in January, which contributed $3 million to second-quarter revenues.
From January 1 to the end of November 2010, the Amos 5i is expected to generate $4.6 million in revenues. Since the company paid $20 million up front, the adventure will wind up costing it $15.4 million. Spacecom has not yet closed contracts with Amos 5i's present clients to buy alternative services and then service from the future Amos 5, and reduced its backlog of orders by $14 million compared with the end of March 2010, to $37 million.
Spacecom wound up reporting a gross loss of $3.8 million for the second quarter, compared with a gross profit of $8.9 million in the same period of 2009. Thankfully, the company had financing income of $2.5 million for the quarter, which helped offset the pain. At the bottom line it posted a net loss of $5.4 million, compared with a net loss of $4 million in the same period of 2009.
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