Comarco Gets Four-Month Extension on Navy Contract : Military: Yorba Linda firm’s work at China Lake base was to have ended today. Company has been diversifying.

Four days after saying the Navy would cancel a longstanding contract effective today, Comarco Inc. said Tuesday that the Navy has asked the company to continue providing engineering services at its China Lake air base for four more months.

Comarco, which has served the Navy for more than 30 years, depends on the military branch for 15% of its annual revenue and 12% of its profit. But the company has been anticipating the loss of the contract and has been diversifying its activities, said Don M. Bailey, Comarco’s president.

“The impact won’t be too great,” Bailey said. “It’s sad we are losing a customer we have had for 30 years, [but] in the last couple of years, we have become known as a wireless communications products company. We have moved away from the military business.”

Analyst Mark Matheson of the Crowell, Weedon & Co. brokerage in Los Angeles agreed, saying “they have been planning this for years. . . . I don’t think it affects their future very much.”

The Yorba Linda company said late Friday that it had lost the contract to work on missiles and other tasks at the China Lake Air Warfare Center in the California desert, where it employs about 100 workers. Bailey said he was informed by the Navy Friday afternoon.

Though the contract was scheduled to expire today, the Navy sent word Tuesday that it wanted to extend the terms through Sept. 30, Bailey said.

He said he expects that many of the Comarco workers at China Lake eventually will work for the company that won the new contract, Sverdrup Corp. in Maryland Heights, Mo. Sverdrup prevailed as the Navy consolidated eight existing contracts, including Comarco’s, into one.

In addition to the China Lake contract, Comarco has a smaller contract to provide similar services for the Navy base at Point Mugu, but Bailey said that pact might be in jeopardy as well because the site remains on the “hit list” of bases slated for closure. The company has about a dozen workers there.

Navy contracts have bolstered Comarco’s revenue and income, which amounted, respectively, to $17.3 million and $838,000 for its fiscal first quarter, which ended April 30. But Bailey said the company’s reliance on the Navy contracts has been shrinking steadily as the company has branched out to the wireless communications industry.

The company has a work force of 55 in Orange County, including those at its wireless communications plant in Costa Mesa. It employs a total of 700 workers at 16 sites in eight states and South Korea.

The Navy work “has been part of our legacy, but it is not part of our future,” Bailey said. In the long run, he said, “it’s best we get on with things and accelerate our transition” into non-defense work.

Comarco common stock closed at $9.865 a share unchanged Tuesday in trading on the Nasdaq.