Atlanta-based wireless communications firm EMS Technologies Inc. announced Friday plans to sell its struggling Montreal division, a move that would leave Ottawa as its only Canadian operation.
The company's Montreal-based Space and Technology unit serves the commercial space market, which has been suffering for some time from weak customer spending.
"Like all competitors in the space industry, the financial performance of our Montreal division has been volatile, and has been significantly affected by the current period of slow orders activity," Alfred G. Hansen, company president and CEO, said in a statement.
"While it is inevitable that current satellites will someday need to be replaced and new services will spur demand for more satellites, the timing of this future business is uncertain."
Hansen said it is no longer worthwhile to continue investing time and energy in the operation rather than focus entirely on EMS's other four divisions, all of which are profitable.
"We have concluded that selling our commercial space division would allow the company to focus its resources and energies, both now and in the future, toward capitalizing on the considerable momentum that we have in our other businesses," he said.
The Montreal division has a total book value of about $54 million. Discontinuing operations related to the division will incur a third-quarter charge of around $20 million, the company said. EMS hopes to realize net proceeds of at least $34 million on the sale (all figures in U.S. dollars).
When EMS reported first quarter results in April, the Ottawa-based SATCOM unit emerged as one of the bright spots in the period.
SATCOM, which employs about 200 people in Ottawa, manufactures antennas and terminals for aeronautical and land-mobile communications via satellite.
SATCOM achieved stronger profits thanks to greater sales to the U.S. defense market. Net profits jumped from $714,000 last year to $1.2 million, while revenues were up to $10.5 million from $6.3 million.
Overall, the company achieved roughly breakeven results as revenues slipped to $67 million from $70 million the year before.
The weak link during the quarter was Montreal. It reported a loss of $2.7 million in the quarter, compared with a profit of $590,000 last year. Revenues fell from $18.62 million to $10.2 million.
EMS will release its second-quarter results and host a conference call on the fate of the Montreal operation on July 29.
