- The Washington Times - Monday, September 19, 2005

Orbital Sciences Corp. last week increased its business with NASA after the space and defense contractor won a contract potentially worth more than $200 million.

The Sterling, Va., satellite manufacturer on Friday won the seven-year contract from the National Aeronautics and Space Administration. Orbital will provide the launch services for Pegasus and Taurus rockets, which are used to put small-class satellites into orbit for scientific and space exploration missions.

It is the fifth time NASA picked Orbital as a long-term provider for space launch work, the company said. While there is no set amount for the contract, Orbital estimated the work could exceed $200 million.

Orbital shares on the New York Stock Exchange yesterday closed at $11.79, down 30 cents from Friday’s price at $12.09. The company’s stock has been trading between $9 and $13 for the past year.

Analyst Patrick McCarthy, with Arlington investment bank Friedman, Billings, Ramsey Group Inc., said the NASA contract will not have an impact on the company’s bottom line until at least 2007.

“But it gives a lot of confidence for that particular business segment for this decade and into the next,” Mr. McCarthy said.

Mr. McCarthy, who rated Orbital as outperforming the market, does not own any company shares, but Friedman, Billings, Ramsey is pursuing business with Orbital.

While the contract bolstered confidence, Orbital has been under investigation by the federal government on unspecified contracting procedures since May.

Company spokesman Barron Beneski said Orbital is cooperating with authorities and was not aware of violating any federal procurement laws.

He would not comment further.

Additionally, the company faces the risk of flat sales for its core missile defense program and work delays, said Gary Liebowitz, an analyst with Charlotte, N.C., investment bank Wachovia Capital Markets LLC.

Mr. Liebowitz, who advised investors to hold their Orbital stock, does not own any company shares, but Wachovia has done business with the company.

In its recent quarterly earnings, Orbital reported a slump in income, blaming short-term production and delivery delays for several of its commercial satellites and products for missile defense.

Income for the quarter ended June 30 fell 32 percent to $7.6 million (12 cents per diluted share) from $11.1 million (17 cents) a year earlier. Diluted earnings include the value of convertible warrants and stock options.

Sales dipped less than 1 percent to $177.4 million from $177.7 million in the same2004 quarter.

Despite the drop, Orbital is poised for additional NASA business if the federal agency selects Bethesda contractor Lockheed Martin Corp. for a $15 billion project.

Orbital is a member of Lockheed’s subcontractor team bidding for the contract that will update NASA’s crew exploration vehicle. If Lockheed wins the contract, Orbital would work on the vehicle’s crew escape system and could possibly earn $100 million annually.

NASA is expected to announce the winner in March.


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