Gilat Satellite Networks Ltd. [GILTF] reported a profit of $7.9 million or 38 cents per diluted share on revenue of $108.6 million for the second quarter, which ended June 30. The consensus of analysts was that Gilat would earn 36 cents per share, so in that sense the company had a successful quarter even if its profit was less than a year ago.

For the second quarter of 1999, for example, Gilat reported a profit of about $12.1 million or 56 cents per diluted share on revenue of $74.4 million.

For the first half of this year, Gilat said it earned $15.6 million or 65 cents per diluted share on revenue of about $194.5 million. For the same period one year ago, the company reported earning $20.1 million or 97 cents per diluted share on revenue of almost $140.5 million.

…Quarterly Results Exceed Wall Street Expectations

Gilat’s quarterly performance did get noticed by Wall Street analysts. In fact, the quarterly numbers came in ahead of expectations.

“Gilat reported better than expected second quarter earnings per share of 38 cents, versus our estimate of 36 cents,” reported New York-based investment firm Banc of America Securities. “Revenues grew to $108.6 million, an increase of 46 percent over second quarter ’98 results, and gross margins were 36.3 percent. We estimated revenues to be $96.1 million with gross margins of 36.5 percent.”

“The core business remains fairly robust, though we are slightly concerned about the increasing SG&A margins. Once Gilat-To-Home takes off, we expect that Gilat will be reaping the rewards of increased VSAT terminals, and eventually, higher gross margins.” Banc of America reiterated its Buy rating.

C.E. Unterberg was a bit more in its analysis. “Gilat reported in line with our expectations and slightly above the consensus estimate. We believe the Street will interpret the second quarter as a ‘good’ quarter,” New York-based Unterberg reported.

“We remain mixed on Gilat, but acknowledge the stock is cheap if Gilat-To-Home financially works and the company’s core is intact. We have mixed impressions of the company’s core enterprise VSAT business, which is putting up good financial numbers but has a number of orders of questionable status, which could lead to lower than expected growth in the near-term,” Unterberg reported.