Comarco Expects Lower Earnings Because of Delayed Contract

Blaming problems at one of its recent acquisitions, Comarco Inc. of Anaheim said Monday that it expects to report net profits of about $1 million for its fiscal 1986, less than half the approximately $2.2 million originally projected and about $1 million less than reported for fiscal 1985.

The fast-growing defense contractor, which acquired three small companies in the last two years, said one of the acquisitions, Decisions & Designs Inc. in McLean, Va., did not receive an expected multimillion-dollar contract from the U.S. Navy, the major reason for the earnings drop.

Despite the lower-than-expected earnings for the fiscal year, which ends Saturday, Comarco is projecting that its revenues will reach about $80 million for the year, about twice the level of the previous year.

James C. Quibodeaux, Comarco’s chief financial officer, said that the contract award was delayed throughout 1986 and that Decisions & Designs kept about 20 employees on its payroll in anticipation of landing the contract. The company’s reluctance to release those workers last year increased D&D;’s operating costs and cut into earnings. Quibodeaux said the employees would be laid off shortly, reducing total staff at the Virginia-based firm to about 60.

However, Quibodeaux said, Decisions & Designs still expects to receive the Navy contract later this year. The contact is for computer software programs for the Joint Cruise Missile program.

Quibodeaux said Comarco will take a $1.7-million pretax charge for the year, which translates into a $1.2-million deduction on an after-tax basis.

Comarco bought Decisions & Designs in December, 1985, for $3 million with the expectation that the small company’s software design technology and military contracts would enhance its technology and raise its profile within the Pentagon.

Glenn D. Buell Jr., Comarco’s president and chief executive, said that while the company is disappointed with the earnings drop, its “operations remain sound and healthy, and (its) financial condition is excellent.”