What happened
Shares of satellite communications company Globalstar (GSAT -7.48%) closed 14.3% higher Friday after meeting earnings expectations for fiscal third quarter 2020. Analysts had predicted that Globalstar would lose about $0.01 per share in Q3 -- and that's precisely what Globalstar did, reporting $0.01 per share in net losses (flat against last year) on $32.8 million in sales (down 15%).
So what
Globalstar blamed "the lingering impact of the oil and gas industry downturn" and "a decline in subscriber-driven revenue streams" for its sales decline but insisted that it still sees opportunities in providing satellite-borne Internet of Things connectivity, "as well as emergency messaging and tracking for both consumers and enterprises."
Image source: Getty Images.
Now what
Management did not provide earnings guidance for the fourth quarter or for the year as a whole. That being said, analysts who follow the company generally agree that Q4 is likely to be unprofitable as was Q3, with losses of $0.02 per share expected. For the full year, analysts are forecasting breakeven earnings but a decline in sales of 2%.
That might not sound like much but, relative to the big decline in sales seen in Q3, a mere 2% decline for the year as a whole may actually imply an improvement in Globalstar's business (assuming the analysts are right, that is) going forward. The fact that Globalstar hit consensus targets for the quarter, combined with a consensus calling for less revenue slippage in the coming quarter, may be why Globalstar stock moved higher today.
