Satellite Technology Purchasing Supplier : Acquisition: All-stock buy will let STM take over federal contracts held by San Diego’s RF Microsystems.
Satellite Technology Management Inc. said Tuesday that it has agreed to purchase a San Diego supplier of microwave components.
The deal to buy privately held RF Microsystems would save production costs and allow STM to take advantage of the supplier’s potentially lucrative government contacts. No cash value for the merger was immediately available, company officials said.
The all-stock transaction, expected to close by year’s end, would boost by $5 million STM’s annual revenue, which was $19 million for 1992.
That extra revenue would help STM, which has been unable to dispel a cloud that has hung over the company since May, when the U.S. Department of Commerce began investigating its export operations.
Though the company earned $3.6 million last year, it has seen profits plummet since then. For the first half of 1993, STM posted a loss of $1.5 million, or 31 cents a share, on revenue of $3.6 million. That contrasted with a profit of $1.7 million, or 42 cents a share, on revenue of $9.3 million for the same period a year earlier.
The company blamed a drop in orders for its microwave radio transmitter-receivers and electronics boxes for small communications satellite dishes on wary customers awaiting the outcome of the investigation. The company denies any wrongdoing.
Brooks Ohlsen, a Commerce Department spokesman in Irvine, would not comment Tuesday on the status of that investigation, which included a seizure in May of $1.5 million worth of equipment intended for shipment to Iran.
In July, the company also was forced to stop shipment of a $1.5-million satellite system to Brazil.
Senior Vice President Steve Strohman confirmed that the investigation is ongoing but said that third-quarter earnings, due out in two to three weeks, should reflect a slight increase in revenue as customer confidence returns.
“The investigation is still in effect,” Strohman said. “But there have been no charges filed and no indictments. As far as we know, it is moving through the bureaucratic process.”
In Tuesday’s Nasdaq trading, STM’s stock closed at $6.375 a share, unchanged.