Radyne Corp. expects that a coming competition managed by the Pentagon’s

Operationally Responsive Space (ORS) Office could demonstrate to skeptical investors the value of the company’s AeroAstro small-satellite manufacturer, Radyne Chief Executive Myron Wagner said.

Phoenix-based Radyne purchased AeroAstro in August, a deal that drew criticism from some of Radyne’s institutional investors, who said the company was diversifying beyond its core competence in satellite ground systems, principally modems and amplifiers.

These investors also said Radyne should try to unlock value not reflected in its stock price by putting itself up for sale. Radyne management announced in February that it had hired Needham and Co. to evaluate strategic alternatives, including a sale of the company.

In a March 18 conference call with investors, Wagner declined to comment on

a possible sale, but said that while the topic was a distraction for management, Radyne remains on the lookout for small acquisitions of its own.

reported revenue

of $142.1 million in 2007, a 6 percent increase over 2006 that

largely is due to the contribution of AeroAstro. Radyne said its microsatellite division, which is mainly AeroAstro, reported $7.7 million in revenue

in 2007. The AeroAstro figures include sales only since the August purchase by Radyne.

Wagner said that for 2008, Radyne forecasts a 15 percent increase in sales, with part of the increase due to a full year’s contribution by AeroAstro.

Wagner said that since the August purchase of AeroAstro, Radyne has seen a 50 percent increase in the dollar value of contracts for which Radyne could bid with its newly acquired small-satellite division.

competes with Microsat Systems Inc. of Littleton, Colo., and Britain’s Surrey Sate

llite Technology Ltd., among others, in the growing market for satellites weighing between a few kilograms and 200 kilograms at launch, and using 200 watts of power or less.

Wagner said a near-term opportunity for Radyne will be a competition to build the Modular, Multi-Mission Space Vehicle. Bid

requests from the Operationally Responsive Space Office would be issued in the coming weeks for that effort, he said.

recently won a $1 million order, which could rise by an additional $2 million, to provide ground equipment for the two-satellite civil and

military Al Yah Satellite Communications Co.

, known as Yahsat.

Wagner said Radyne’sXicom amplifier division is in good position to win further business from the U.S. Defense Department’s six-satellite Wideband Global Satcom system, whose first satellite has been launched.