Norsat Loses $1.2 Million in 1Q

VANCOUVER, Canada, May 13, 2005/Satnews Daily/ — Norsat International Inc. (TSX – NII; OTC BB - NSATF) posted first quarter sales of $2.5 million, gross margins of 38 percent, and net loss of $1.2 million, compared to sales of $4.4 million, gross margins of 47 percent and net income of $0.7 million in the same period last year.

Reporting its financial results for the first quarter ended March 31, 2005, Norsat said sales from Satellite Systems were lower than previous quarters due mostly to delays in receiving customer contracts.

The company said the Microwave business unit continued to see price erosion and competitive bidding from its competitors, producing sales of $1.9 million, compared to the $2.7 million in the same period last year.

First quarter sales were $2.5 million, down 42 percent from the $4.4 million earned in the first quarter of 2004. Satellite Systems revenue was $0.6 million and includes the delivery of a Norsat NewsLink portable terminal into another premier satellite newsgathering organization ITN, United Kingdom's largest television news supplier.

Norsat said gross margin from Satellite Systems remained strong at 46 percent in the first quarter of 2005, compared with the 50 percent in the same period last year. Microwave margins were significantly lower than the 45 percent recorded in the in the first quarter of 2004, but rebounded from the 20 percent in the fourth quarter of 2004 and consistent with the 36 percent for fiscal 2004.

Operating costs totaled $2.0 million and were slightly higher than the $1.9 million in the same period of 2004. Net loss for the quarter was $1.2 million or $0.03 per share - basic and diluted, compared to net earnings of $0.7 million or $0.02 per share – basic and diluted in 2004.

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