What happened

Shares of satellite telecommunications specialist Intelsat (NYSE:I) cratered today, closing down 15% after the company reported dismal first-quarter earnings.

So what

It's been nearly two months since Intelsat announced its upcoming merger with OneWeb. That deal is still up in the air and uncompleted, but we received some more recent news yesterday, when Intelsat reported its financial results for fiscal Q1 2017.

Now no one expected Intelsat to have much good to say about that quarter. To the contrary, Wall Street analysts were predicting the company would report $0.13 per share in losses on revenue of under $545 million. What was shocking, though, was how badly Intelsat managed to miss even that goal. Intelsat reported yesterday that its Q1 losses were actually $0.29 per share (twice as bad as expected) on revenue of just $538.5 million.

Graph of stock dropping

Image source: Getty Images.

Now what

Prior to Thursday's earnings report, Intelsat had posted four straight quarters of significant profits. In fact, Intelsat made so much money last year that its trailing price-to-earnings ratio -- even counting this Q1 loss -- is an apparently ridiculously cheap 0.4.

Don't be fooled by that number, though. Intelsat also has a lot of debt -- about $13.8 billion net of cash on hand. With all that debt on its books, the company's debt-adjusted P/E ratio is a much less cheap-looking 15.1. Worse, analysts who follow Intelsat see little hope of the company earning a profit this year, or next year, either -- so Intelsat's P/E ratio is going to swell bigger and bigger, and look more and more expensive, as time goes by.

The sooner this company seals the deal with OneWeb, secures its promised cash infusion from SoftBank, and begins paying down some of its debt, the better.

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.