Communications Satellite Corp. yesterday adopted an aggressive stance in the wake of an adverse court order on international rates.
Not only will as U.S. Court of Appeals decision of Oct. 14 be appealed but also the company's quarterly dividend rate will be boosted, Comsat announced.
After 13 consecutive quarterly payouts at 25 cents a share - a flat record based on uncertainty about the international rate case but one which angered some stockholders - Comsat's board yesterday voted to increase the dividend to 35 cents a share quarterly, starting with a distribution on Dec. 12 to stockholders of record Nov. 11.
Comsat also posted higher profits in the third quarter of 1977. Earnings rose to $9.5 million (95 cents a share) compared with $7.6 million (76 cents) in the same period last year. Revenues rose 21 per cent to $44 million.
Excluded from the reported results are revenues of $15.8 million (80 cents a share, after taxes) in the recent quarter and revenues of $13.9 million (70 cents) for the 1976 period. These amounts have been set aside by Comsat in an escrow account, under Federal Communications Commission order, in the event that refunds must be made to customers.
The FCC ordered a substantial reduction in international rates at the end of 1975 and Comsat subsequently appealed that decision. On Oct. 14, the Court of Appeals ruled against Comsat on some particulars but in favor of the firm on other matters. Throughout, Comsat rates have remained at levels existing before the FCC order. The net result of the court order could be a reduction of Comsat's international rates and future profitability - but not by as much as the FCC originally required. Comsat emphasized yesterday that it will appeal the recent court order while proceeding with new hearings on the case at the FCC, as required by the court.
"However, with some of the uncertainties arising out of the rate case reduced by the . . . decision, the board re-examined its dividend policy and increased the quarterly dividends," Comsat stated.
Investors took the announcements by Comsat yesterday as welcome good news. On a volume of 28,100 shares, Comsat common climbed 62 1/2 cents a share on the New York Stock Exchange to close to $29,875. Earlier this week, Comsat traded at a new 1977 low of under $29.
Comsat attributed its third-quarter increase in profits to expanded satellite services, increased overseas business and lower depreciation charges on certain satellites. But the gains were offset partially by the payment, pending appeal, of higher federal tax assessments for 1973 and 1974, the company revealed.
In the first nine months of 1977, Comsat earnings totaled $27.4 million ($2.74 a share), a decline of $2 million (21 cents) from the 1976 period. The decreasereflects revenues set aside in the escrow account.