Applied Signal Technology, Inc. (APSG), a provider of intelligence, surveillance, and reconnaissance solutions, Tuesday reported a marginal decline in profit for the first quarter of fiscal 2010, as higher contract costs more than offset a 6% increase in revenues. Earnings per share, however, topped analysts' estimates by a penny.
The Sunnyvale, California-based company's net income for the first quarter declined to $3.14 million or $0.23 per share from $3.51 million or $0.27 per share in the previous year.
Prior year's quarter earnings included a benefit of $0.02 per share from a change in the method of allocating indirect costs.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter increased 6% to $48.08 million from $45.38 million last year due to a growth in network intelligence business as well as gains in broadband equipment and sensor systems. Analysts expected revenues of $51.25 million for the quarter.
Contract revenues increased to $46.61 million from $43.69 million a year ago. Revenues from royalties were $1.47 million, down from $1.70 million in the comparable quarter last year.
Total operating expenses increased to $42.89 million from $39.74 million a year ago, as contract costs rose to $34.00 million from $31.53 million in the previous year.
New orders received during the first quarter were $30.02 million compared to $33.12 million of new orders received during the first quarter of fiscal 2009. The company noted that while demand for broadband and cyber security development efforts remained strong, the delay in the authorization of the 2010 defense budget caused some delays in new orders.
William Vleet, president and chief executive officer of Applied Signal Technology, Inc., said, "While our pace of growth was undercut specifically by an expected decline in shipments of some tactical products and, more generally, as a result of the shift in timing of the FY 2010 defense budget process, we were pleased with the growth we experienced this quarter."
"We are especially gratified with the rapid development of our network intelligence business which, aided by our recent acquisition of Pyxis Engineering, is well positioned to capitalize on the urgent demand for enhanced cyber security," Vleet added.
APSG closed Tuesday's regular trading at $19.51, up 0.54 or 2.85%, on a volume of 0.25 million shares on the Nasdaq. In after hours, the stock declined 0.96 or 4.92%, trading at $18.55.
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