- Ken Traub named CEO of Comtech Telecommunications Corp. (NASDAQ: CMTL) in January after joining board in October
- Traub to oversee turnaround of Comtech, whose shares have lagged for several years
- Turnaround goals include operational discipline, supporting profitable growth, review of strategic alternatives and a stronger capital structure
- Comtech already announced $40 million capital infusion to shore up balance sheet
- Traub swiftly made a deal with activist investor, giving one Comtech board seat and agreeing on a turnaround plan
- Traub brings extensive track record with corporate governance cleanups, including successful turnaround of American Banknote Holographics
- American Bank Note Holographics saw a more-than 1,000% increase in shareholder value after sale to JDSU with Mr. Traub as President, CEO and director
By John Jannarone and Jarrett Banks
From corporate governance shortcomings to balance sheet worries, Ken Traub isn’t afraid to roll up his sleeves when he sees a company facing big structural problems. His latest mission: Turning around Comtech Telecommunications Corp. (Nasdaq: CMTL) as its new CEO.
Comtech, which provides satellite, wireless and terrestrial technologies for both commercial and military applications, hired Mr. Traub late last year as a director and within three months he ascended to President and CEO. He’s been tasked with reviving the company, whose share price has fallen steadily over the last several years.
He’s targeting a number of initiatives to right the ship, including better operational discipline, a review of strategic alternatives and a stronger capital structure. He’s already made a big step on the latter effort, announcing a $40 million capital infusion that helped cure covenant breaches on some debt, lowered interest rates and added financial flexibility.
That deal, which was announced just weeks after Mr. Traub became CEO, highlights his ability to work with all stakeholders when a company is under strain. In this case, it was existing holders of Comtech’s convertible preferred stock and subordinated debt who agreed to the deal.
To appreciate Mr. Traub’s skill set, it’s important to know more about his unusual history with troubled companies. Most notably, he arrived for his first day on the job as CFO at American Bank Note Holographics, a company with roots in the 18th century as the original printer of U.S. currency, only to quickly discover problems with the books.
“I met with auditors and management and it took me one day to realize SEC misstatements had been made,” Mr. Traub said in an interview with CorpGov. (He noted ironically that American Bank Note Holographics was itself in the business of preventing fraud).
It was the start of a wild ride, with Mr. Traub resigning only to be asked to return and advise the company first as a consultant and shortly thereafter as President, CEO and director. “I wanted to save the company,” he said.
Indeed, Mr. Traub took decisive measures. With SEC investigations and Department of Justice criminal investigations pending, he orchestrated the departure of all but one director, recruited a new board and terminated the entire senior executive team. Mr. Traub restructured the company’s debt and regained the confidence of both creditors and employees, including settling with an activist. Ultimately, the company was sold to JDSU resulting in a 1,000%+ return to shareholders under his leadership as CEO.
Mr. Traub took his playbook to more companies in the role of an activist investor with a laser focus on corporate governance improvements. He has worked alongside Starboard Value while it was still part of Ramius and served as Managing Partner, Raging Capital Management, LLC. “I focused on identifying public companies that fell out of favor for fixable reasons,” he said.
Mr. Traub sees parallels with Comtech and some of his other turnaround efforts. The company, facing an unusual activist attack from two former CEOs, sought Mr. Traub out and invited him to join the board. He said he was drawn to the company because he admired its rich history and important work involving satellite communications, emergency response and applications on the battlefield.
Recognizing the challenge of going to a proxy contest, Mr. Traub decided to make a deal with the activist and focus on improving operations immediately. Just after Mr. Traub joined the Board, Comtech was awarded a $50 million contract from the U.S. Navy for its SATCOM modems. At the end of November, he was elevated to Executive Chairman and in January 2025 became President and CEO.
Immediately, Mr. Traub recognized serious problems. The company had too many product lines and some products were being sold at a negative gross margin and he and the team made the decision to exit those lines of business.
The company has also demonstrated momentum with new product launches since Mr. Traub took the helm as CEO. Those include a new multipath radio platform and the ELEVATE 2.0 multi-orbit satellite communications (“SATCOM”) platform.
Comtech has a foothold in the critical satellite communications industry, though it serves a different role than Elon Musk’s Starlink, which focuses on delivering high-speed, low-latency broadband internet through satellites operating in low Earth orbit. Comtech, on the other hand, provides satellite network equipment, ground station solutions, and technologies that support both satellite and terrestrial communications.
Comtech supplies infrastructure that enables satellite communications to function effectively—a feature that also makes it resilient to economic cycles. The company specializes in high-security, mission-critical applications and excels in solving complex, time-sensitive communication challenges. This includes partnerships in which it supplies mission critical technologies for the U.S. Army, Navy, Marines and Air Force.
The company’s financial profile reflects a serious opportunity for Mr. Traub to unlock. Comtech generates about $500 million in annual revenue with positive adjusted EBITDA. It sports a funded backlog of $763.8 million and revenue visibility of approximately $1.6 billion.
Comtech is “in the business of keeping the world safe but it had lost credibility among some stakeholders,” Mr. Traub said. “We are committed to earning the trust and confidence of all of the Company’s stakeholders as we execute on our plans to build a stronger and healthier future for Comtech.”
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