Comarco Says Navy Contract Is Still in Offing

Comarco Inc., seeking to reassure investors after a sharp drop in its stock price over the past several months, said it still is being considered for renewal of a key U.S. Navy contract it has held for five years.

Comarco, an Anaheim-based computer services and engineering company, is bidding against several other firms for the engineering services contract with the Naval Weapons Center at China Lake. The current, $105-million contract expires this summer. The Navy recently delayed until mid-July its decision on awarding the new contract.

“The delay in the award of a new contract . . . may be causing concern with the investment community regarding Comarco’s business outlook,” said Comarco Chairman Walter V. Sterling in a statement Thursday.

“The stock’s gone from $4 (per share) to $2 in the last couple months,” Sterling said in an interview. “I think that’s primarily because of the lack of any information about China Lake. The longer it takes, the more the investment people worry about it.”

Key to Future

Comarco’s stock closed Thursday at $2.25, up 12 1/2-cents for the day in over-the-counter trading.

The China Lake contract, which supplied about one-third of the firm’s 1987 revenues of $76 million, is key to the Anaheim firm’s future prospects.

“We can operate without the contract,” Sterling said, “but it would be a one-third smaller company without it.”

Gail Scully, an analyst with the New York investment firm Argus Research, also attributed the decline in Comarco’s stock to uncertainty over the China Lake award.

Winning the contract “is not a make-or-break situation” for Comarco, Scully said. “But they will have to do some restructuring and significantly cut staff” without it.

Sterling said he is “extremely optimistic” that his company will win the Navy contract.