Orbital Sciences Corp. has raised its projections of demand for commercial telecommunications satellites in 2005, and expects to land one more contract for its Star geostationary satellite platform before the year is out.

During a July 20 conference call with analysts to discuss the company’s second-quarter financial results, David W. Thompson, Orbital’s chief executive officer, predicted that about 20 commercial satellites will be sold worldwide this year. The company previously projected market demand at about 16 to 18 satellites.

Thompson projected that 30-35 percent of the market will be for the relatively small satellites that Orbital specializes in, and that the company will be able to land 40-45 percent of these contracts. Dulles, Va.-based Orbital did not sell any commercial communications satellites last year, but already has booked two orders this year: one with PanAmSat Corp. of Wilton, Conn., and one with an undisclosed customer.

One industry official said the undisclosed customer also is PanAmSat and that the satellite is the SBS-6R satellite that PanAmSat is procuring in partnership with JSAT Corp. of Tokyo as part of a $140 million investment in a joint venture dubbed Horizons-2.

“The small geo-satellite niche that we focus on is becoming increasingly popular with operators,” Thompson said.

Although most commercial satellite manufacturers focus on large platforms, Thompson acknowledged that Orbital has competition in its niche. He cited Lockheed Martin Commercial Space Systems of Newtown, Pa., as a major rival. Orbital also is likely to face competition from a recently announced satellite manufacturing partnership between EADS Astrium of Europe and Antrix Corp. of Bangalore, India, the commercial arm of the Indian Space Research Organisation.

Meanwhile, Orbital’s revenues for the 2005 second quarter were flat at $177.4 million, compared to $177.7 million for the same period last year. Company officials attributed the lack of growth to delays associated with some communications satellites as well as the Orbital Boost Vehicle that the company supplies to the U.S. Missile Defense Agency.

Thompson said Orbital took a $2 million hit on revenues due to a problem that was discovered on the Telkom-2 satellite just days before its scheduled June launch aboard an Ariane 5 rocket from Kourou, French Guiana. Orbital built Telkom-2 for PT Telkomunikasi Indonesia of Jakarta.

J.R. Thompson, president of Orbital, said during the conference call that the Telkom-2 short-circuit has been traced to a manufacturing defect in an avionics part. The problem has been fixed, and the satellite is scheduled to be shipped back to Kourou in August for a possible September launch.

Orbital also has found minor defects on several other satellites being prepared for launch — PanAmSat Corp.’s Galaxy 14 and Galaxy 15, and SingTel Optus’ Optus spacecraft — which were detected following an in-orbit problem on PanAmSat’s Galaxy 12 satellite in March.

Thompson said that for Galaxy 12, PanAmSat has been able to adjust its operating procedures to avoid a repeat of the problem, which he described as “a low-voltage transient … during power transfer from the solar arrays to the [satellite] batteries, which turned the payload traveling wave guide off.”

Officials with PanAmSat confirmed that the new operating procedures had resolved the problem.

Thompson said “a rather modest design change” on the satellites still under construction has been implemented. Galaxy 14 is now scheduled for launch Aug. 6 aboard a Russian Soyuz rocket from the Russian-run Baikonur Cosmodrome in Kazakhstan.

David Thompson said the glitches illustrate a problem with satellite-component suppliers that all satellite prime contractors, including Orbital, will need to address.

Orbital’s net income for the three-month period ending June 30 was $7.6 million, down from $11.1 million during the same period in 2004. The company attributed the drop to its decision at the end of 2004 to revise tax accounting methodology.

Operating income stayed steady, at $14.7 million compared with the previous year’s $14.5 million.

Revenue in Orbital’s launch vehicles division, which produces small satellite launchers as well as missile defense interceptors and targets, was $87.5 million, up slightly from $86.5 million for the second quarter of last year. Satellite and space systems revenue dropped to $84.8 million from $85.8 million, and transportation management systems saw a decline to $6.2 million from $8 million.

Orbital has thrived in recent years on its defense-related business, and one of the biggest new opportunities in that arena is responsive space — the government term for satellites that can be launched on short notice to fulfill very specific missions. But Thompson said responsive space remains a question mark for now.

“Right now, there’s still some lack of clarity in terms of the real demand drivers for that kind of system,” he said. “It certainly sounds intuitively appealing, but whether it translates into space systems that have strong military utility is, I think, a question that has not yet been answered either in the military or in the industry.”

The conference call gave analysts an opportunity to grill Orbital on the U.S. government’s ongoing investigation into its practices. In May, federal agents raided Orbital facilities in Dulles and Chandler, Ariz., but few details of the probe have surfaced since then.

Thompson said the company is cooperating with the investigation, which he believes is “focused on contract cost-related matters” in some of its launch vehicle programs.

“While we expect the government to discuss its specific concerns with us at some point, that has not happened as of yet, and it is still somewhat hard to predict exactly when that may take place,” Thompson said. He did predict the investigation could take many months, or even up to a year, to run its course, and declined to comment further.

Peter B. de Selding contributed to this story from Paris.