As late as mid-December, it appeared that Orbital Sciences Corp.'s stock would end its year-long descent by falling headlong into the new year. But some year-end good news--including a five-year contract with NASA--has catapulted the Dulles-based satellite maker into 2000.
After sinking to a low of $10.80 a share last month, the company's stock reached a high of $19.50 on Monday, the first business day of the new year, and closed Tuesday at $17.50. Although that is still far below the company's high of 45.31 1/4 a share in January 1999, company officials said the company's core business remains strong, and shareholders hope that its financial follies are in the past.
Orbital spent the year shocking and disappointing Wall Street analysts and shareholders, twice instituting more conservative accounting methods and restating its earnings. It still faces a lawsuit filed by shareholders claiming that the company had been artificially inflating profits, charges that are common in cases of earnings revision. Orbital has denied the charges.
The company also failed to meet earnings projections on several occasions, contributing to its credibility problems on Wall Street and scaring investors who began dumping the stock. "The stock was trading very, very low and is just now starting to recover from a ridiculously low value," said Armand Musey, an analyst with Banc of America in New York.
Topping the list of the recent good-news announcements was the report that Orbital had landed a NASA contract that could net the company $1.5 billion over the next five years. Orbital will design, produce and test satellites for use by NASA's Goddard Space Center in space missions to study climate. News of the contract award last week sent Orbital's stock soaring 19 percent.
The company, which had sales of about $734 million in 1998, also sent ripples of relief through Wall Street when, late last year, it sold 33 percent of a subsidiary for $75 million to a group composed primarily of Canadian investors, easing concerns about the company's liquidity.
With the sale of its stake in MacDonald, Dettwiler & Associates Ltd., a company based in Vancouver, B.C., that sells software and hardware products that gather and process satellite data, Orbital should have enough cash to get it through several quarters, Musey said.
Lingering concerns over Orbital's liquidity were highlighted last week when its bankers refused to approve a $27.5 million acquisition the company had planned. But Orbital officials said they will continue to pursue a deal to buy Tulsa-based Lowrance Electronics, which sells sonar, global positioning systems and aviation products.
Orbital's steep decline began early last year.
The company restated its earnings in February after changing its accounting practices, which some analysts said were less conservative than other similar companies. In April, the company fired its auditor, KPMG LLP, after an accounting dispute during which KPMG said in a letter filed with the Securities and Exchange Commission that there were "material weaknesses" in the way Orbital recorded financial information.
The final hit came in November, when the company announced that it would restate earnings again. Analysts began to question whether the company had enough controls in place to handle the company's rapid growth and numerous acquisitions.
Financially, Orbital now appears to be headed for more solid ground, Musey said.
"They clearly have gone from being a firm with pretty aggressive accounting to one of the most conservative," Musey said, "so hopefully a lot of the accounting issues are behind them."
Some analysts attributed Orbital's financial troubles to thin management, a situation the company also has tried to address. Last fall, the company named James R. Thompson Jr. to a new position--president and chief operating officer--freeing David W. Thompson (no relation), company founder and chief executive, to focus on bigger-picture strategy, rather than day-to-day operations.
Musey said Orbital has kept its forthcoming financial projections low in an effort hold down expectations about this quarter's earnings. Analysts and shareholders are eagerly awaiting the company's revised earnings for the past 10 quarters. The company has been working on the figures with its new auditor, PricewaterhouseCoopers, and KPMG, and they may be released in the next few weeks.
"We're definitely looking forward to resolving that issue . . . and then moving forward," said Berry Beneski, a spokesman for Orbital.
The company also is anticipating the launch of high-resolution imaging satellites, which will provide digital imagery taken from space. Competitor Space Imaging of Thornton, Colo., already is up and running with its high-resolution satellite, Beneski said.
Orbital will sell the high-resolution images, which can focus as close as one mile from the ground, to such customers as the federal government through its business Orbimage.
Also this year, the company plans to open its new satellite manufacturing facility in Dulles, part of the company's expansion of its Loudoun County campus.
CAPTION: The hiring of a new executive has freed Orbital chief executive David W. Thompson, above, to focus on bigger-picture strategy.