Gilat lowers guidance after selling unit

Gilat cut its 2013 full-year revenue forecast from $310 million to $230 million, following the sale of Spacenet.

On Tuesday, Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) completed the sale of its US subsidiary Spacenet Inc. to Oklahoma-based subsidiary SageNet LLC for $16 million, after a delay of a few weeks. It will report a capital loss of $1-3 million on the sale. Spacenet was part of the services division of Gilat, a provider of satellite communications terminals.

When Gilat announced Spacenet's sale in August, it said that it would update its targets for the next two years when the deal was closed to exclude Spacenet's contribution. Gilat has therefore cut its 2013 full-year revenue forecast from $310 million to $230 million. This indicates that Spacenet would have contributed $80 million to Gilat's revenue, 4% more than in 2012. Excluding Spacenet, Gilat posted pro forma revenue of $271 million in 2013; it guidance indicates that revenue will fall 15% in 2013, even without Spacenet's sale.

However, Spacenet's contribution to Gilat's profits was negative: Gilat expects it earnings before interest, taxes, depreciation and amortization (EBITDA) margin to widen to 7% from 6%.

"We believe this is an important step that will strengthen Gilat's strategic focus as a satellite communications technology company," said Gilat CEO Erez Antebi on the sale. "Spacenet has been a part of Gilat for fifteen years, and… will continue to be a strategic partner and customer of Gilat."

Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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