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ViaSat’s Share Price Dips Amid Solid Improvement in Revenue

Shares of ViaSat Inc. touched a one-year low on May 21, despite the company having reported the day before significant increases in revenue in its fourth-quarter and year-end financial results for fiscal 2014.

Carlsbad-based ViaSat (Nasdaq: VSAT) increased revenue in the fourth quarter to $343.9 million, up 11.4 percent from $308.7 million in the same quarter the year prior. Likewise, the electronics builder and service provider grew its yearly revenue by 20.6 percent to $1.35 billion. The company has grown its annual revenue every year — by 29.5 percent from 2012 to 2013 — since it posted revenue of $278.6 million in 2004.

Still, the company reported net losses for the recent quarter and fiscal year, which ended April 4. But while its quarterly loss of $3.5 million compares unfavorably with the $1.9 million profit in the year-ago quarter, its fiscal 2014 net loss of $9.4 million was a marked improvement from the prior year, when it posted a net loss of $41.2 million. The company released its results late May 20.

Nevertheless, traders took shares of Carlsbad’s biggest tech company down more than 9 percent the next day to $53.03 before they bounced up slightly to close at $53.87.

The stock made its move after ViaSat posted pro-forma diluted earnings — a closely watched number — of 10 cents per share. Analysts collectively predicted 11 cents per share, according to published reports. In the year-ago quarter, that earnings figure was 19 cents per share.

Wells Fargo Securities analyst Andrew Spinola said in a May 20 research note that he viewed any sell-off as a buying opportunity, saying the stock could go to $70 or higher.

Spinola upgraded shares of ViaSat on May 16, giving them a rating of outperform. A near-term slowdown in subscription growth “is obscuring a very strong financial outlook” for its current fiscal 2015, he wrote.

“We’re excited about building on our momentum and the prospects for continued growth,” ViaSat CEO Mark Dankberg said in a prepared statement. Dankberg noted that the company’s ViaSat-2 satellite is under construction, adding that his firm increased its discretionary spending on research and development as well as on “legal expenses to protect that R&D.” The company has filed two lawsuits against Space Systems Loral, which built its ViaSat-1 satellite.

New Initiatives, Army Work

All of this comes as ViaSat pushes ahead with new initiatives, such as a deal with Thuraya Telecommunications Co. of the United Arab Emirates. The partners plan to develop and launch a highly secure satellite network devoted to machine-to-machine communications. Machine-to-machine is an area expected to grow as more everyday objects are given the capacity to exchange data. The businesses said they will go after opportunities in the energy, utility, logistics and enterprise spaces.

ViaSat also recently said it is rolling out a business version of its broadband satellite communications services, using the ViaSat-1 satellite parked over North America. The service, called Exede Business, augments services provided to homes — and to a growing number of commercial airlines.

In addition to services, ViaSat builds hardware and counts several militaries among its customers. The Pentagon reported May 20 that the company received a $30.6 million U.S. Army deal for production and support of the enhanced bandwidth efficient modem.

ViaSat was in the news in April when it won $283 million in damages in a patent infringement and breach of contract case against Space Systems Loral. The case, involving three patents, is not over yet. ViaSat is also pursuing another case — filed 13 months after the first — involving another set of patents.

ViaSat, founded in 1986, was one of several businesses spawned by Linkabit Corp. Linkabit was sold in 1980, and two of its principals went on to found Qualcomm Inc. (Nasdaq: QCOM).

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