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DigitalGlobe Awards $307M in Contracts for WorldView-3 Satellite
Commercial remote-sensing firm DigitalGlobe on Aug. 30 announced it has signed contracts valued at $307 million with Ball Aerospace and ITT Industries to build the WorldView-3 satellite’s platform and imager, respectively, with a launch scheduled in mid-2014.
The contracts, which were expected, will permit Longmont, Colo.-based DigitalGlobe to meet the conditions of a 10-year, $3.55-billion contract to provide imagery and services to the U.S. National Geospatial-Intelligence Agency (NGA).
DigitalGlobe’s principal competitor, GeoEye Inc. of Dulles, Va., won a $3.8 billion contract under the same NGA program, called EnhancedView, which requires the companies to deliver predetermined amounts of imagery in return for monthly payments by NGA.
Unlike GeoEye, which will be receiving $337 million in NGA funds to offset the cost of the GeoEye-2 satellite now under construction, DigitalGlobe did not seek a cost-sharing arrangement with the U.S. agency for WorldView-3.
DigitalGlobe Chief Executive Jill D. Smith told investors that allowing NGA to co-finance WorldView-3 might have aligned the company so closely to NGA’s requirements that DigitalGlobe’s non-U.S.-government customers would have suffered.
While NGA will have access to up to 60 percent of DigitalGlobe’s entire satellite capacity under the EnhancedView contract, the company is confident it can meet those requirements and still expand its business with other government and commercial customers.
“In a co-funding situation, there are certain restrictions that come with that, and imply perhaps a higher level of dedication to a single customer,” Smith said in an Aug. 9 conference call with investors to discuss the EnhancedView contract, which was awarded Aug. 6. “[G]iven the growth outlook of the business, we feel that by owning and managing the infrastructure we will drive the best returns for our shareholders. Second, the financial strength of the company means we can fund it out of cash.”
In an Aug. 30 filing with the U.S. Securities and Exchange Commission (SEC), DigitalGlobe said it had signed a $180.575 million contract with Ball Aerospace & Technologies of Boulder, Colo., to build and integrate the WorldView-3 satellite, to be delivered by May 2014. The contract value is subject to penalty payments in case of late delivery, and incentive payments for early delivery.
Ball, which built the WorldView-1 and WorldView-2 spacecraft now in orbit, will use its BCP 5000 platform for the work.
DigitalGlobe said it signed a separate contract, valued at $126.5 million, with White Plains, N.Y.-based ITT to build the WorldView-3 optical imager, to be delivered to Ball by July 2013.
WorldView-3 will bear a strong resemblance to WorldView-2 in terms of its performance characteristics.
The NGA’s EnhancedView program appears to require different investments by the two imagery and service providers.
In DigitalGlobe’s case, the $3.55 billion is divided into two pieces. Payments in return for acceptable imagery quality and quantity will total $2.8 billion and be paid out by NGA at a rate of $20.8 million per month for the first four years, and $25 million per month for the remaining six years of the 10-year contract.
A second piece, totaling up to $750 million, is for value-added services that DigitalGlobe will provide to NGA. The U.S. agency already orders such services from DigitalGlobe, but it is done on an ad hoc basis. With the start of EnhancedView, NGA is quantifying the services it expects to order over 10 years in addition to the monthly image-delivery requirement.
Embedded in this $750 million is an undisclosed reimbursement by NGA of costs that DigitalGlobe will incur in expanding its global ground-reception infrastructure to meet EnhancedView’s terms.
Among other demands of the EnhancedView contract, NGA is requiring DigitalGlobe to lower the orbit of its WorldView-2 satellite, launched in 2009, to 680 kilometers from the current 770 kilometers in altitude. The closer view of the Earth will sharpen the satellite’s ground resolution to 41 centimeters, compared to 46 centimeters currently. The orbit change will occur by September 2011, according to DigitalGlobe.
NGA has the right to order a second orbit lowering of WorldView-2, to 496 kilometers, after September 2013 and subject to U.S. regulatory approval. This will further sharpen the resolution of its imagery for NGA. For non-U.S. government customers without special waivers, current regulatory restrictions limit the ground resolution to 50 centimeters, meaning DigitalGlobe degrades imagery resolution to that level before sale. DigitalGlobe has declined to disclose the planned orbit for WorldView-3.
While lowering the satellite’s orbit gives it a more precise view of the Earth, it also reduces its field of view. DigitalGlobe therefore will not be able to image as much territory per orbit as it does now with WorldView-2.
The change in orbit — plus the fact that EnhancedView gives NGA priority rights to 50 percent of all the company’s image-taking capacity, rising to 60 percent — “may require some adjustments in our operational planning and certain product offerings,” Smith said in the Aug. 9 conference call.
But offsetting this will be the enhanced capacity of DigitalGlobe’s ground network. The net result will be a 60 percent increase in DigitalGlobe capacity by 2015, after WorldView-3 is launched and the ground network is expanded. Non-NGA customers should see little or no reduction in their service, Smith said.
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Leading Satellite Industry CEOs & Top Execs to Gather in Paris for World Satellite Business Week
Countering the prolonged economic slump affecting most of the world, top executives of the global satellite communications industry will be looking back at another year of steady growth and profits as they gather in Paris September 6-10 for World Satellite Business Week.
The week-long meeting, viewed as a must-attend event for the satellite industry’s CEOs and other leaders, draws over 500 top executive delegates from 40 countries. The main event, the World Summit for Satellite Financing, is now in its 14thyear, while the Symposium on Earth Observation Business is entering its 2ndyear. The conference is produced by Euroconsult, the leading international research and analyst firm specializing in the satellite sector.
The multi-billion dollar satellite industry is made up of companies that build, launch, and operate satellites vital to the global networks used by broadcast companies, telecommunications networks, defense and security agencies, Earth observation firms and a wide range of service provider companies. Over the course of the week-long conference, top executives from these companies will share insights and opinions on where the industry may be headed for the coming year and what opportunities may lay ahead for firms that can secure financing for major new projects and expansions. CEOs and business leaders from companies such as SES, Intelsat, Eutelsat, Telesat, Inmarsat, AsiaSat, RSCC, Iridium, HNS, Viasat, O3B Networks, Lockheed Martin, EADS Astrium, Arianespace, Société Générale, Morgan Stanley and Coface will be represented at the World Summit for Satellite Financing.
Despite the global economic downturn that began in late 2007, the satellite sector has continued to post a strong performance; with steady growth in most industry segments (see Table 1 below). Digital broadcasting and broadband satellite communications for a variety of uses continue to require increasing transponder capacity, driving growth in the years to come. New satellite projects from emerging regional operators and space countries continue to boost transponder supply and demand, with a record of 30 commercial GEO comsats ordered in 2009 and still solid prospects for 2010. Government demand for commercial satellite communications, driven by the conflict in Afghanistan, has reached record levels, as have security agency and environmental requirements for satellite imagery with government demand for commercial data projected to reach $2.6 billion by 2019, up from only $735 million in 2009.
Entering its second year, the Symposium on Earth Observation Business will examine the factors driving growth in this rapidly-expanding sector. Euroconsult forecasts that overall procurement of commercial satellite Earth observation (EO) data will reach over $4 billion by 2019. This forum will feature top-level speakers from DigitalGlobe, GeoEye, Astrium Services, Ball Aerospace, Google Total, NOAA, Eumetsat, NGA, the UK MoD among others, discussing their business models and providing insight into the opportunities they see in the Earth observation industry.
Are Meteor Showers True Risks To Satellite Companies?
There is a low-probability event cresting today and tomorrow that could pose risks to businesses that rely upon the availability and operations of satellites in orbit. This comes annually via the Perseid Meteor Shower that has started over the last weekend. Space.com noted “The peak of this year’s Perseids is forecast to come during the afternoon hours on Thursday… a single observer might count anywhere from 60 to 100 per hour.”
The Perseid meteor shower is what is left of Comet Swift-Tuttle that last visited the inner solar system in 1992. Each year in August Earth passes through a debris field left along the orbit of the comet. Most debris items are the size pebbles or sand grains, but they enter Earth’s atmosphere at about 37 miles per second or 133,000 MPH. In short, nothing physical responds too well if it is hit by debris. That includes satellites, the space station, space craft and so on. If you don’t trust that this is a risk, all you have to do is look in the annual reports of any major satellite company. Again, it is a low risk, but a risk nonetheless.
There are many companies that could be affected if debris from a meteor shower were to make contacts with any of the satellites. The Boeing Company (NYSE: BA), DigitalGlobe, Inc. (NYSE: DGI), GeoEye, Inc. (NASDAQ: GEOY), Gilat Satellite Networks Ltd. (NASDAQ: GILT), Dish Network Corp. (NASDAQ: DISH), DIRECTV (NASDAQ: DTV), SIRIUS XM Radio Inc. (NASDAQ: SIRI), Hughes Communications, Inc. (NASDAQ: HUGH), ICO Global Communications Holdings Ltd. (NASDAQ: ICOG), Iridium Communications Inc. (NASDAQ: IRDM) and Globalstar Inc. (NASDAQ: GSAT) and ORBCOMM, Inc. (NASDAQ: ORBC) are all likely monitoring their birds with a little more caution during this Perseid show. There is also Orbital Sciences Corp. (NYSE: ORB) and Loral Space & Communications, Inc. (NASDAQ: LORL).
DISH Network notes, “Meteoroid events pose a potential threat to all in-orbit satellites. The probability that meteoroids will damage those satellites increases significantly when the Earth passes through the particulate stream left behind by comets. Occasionally, increased solar activity also poses a potential threat to all in-orbit satellites…. The loss, damage or destruction of any of our satellites as a result of an electrostatic storm, collision with space debris, malfunction or other event could have a material adverse effect on our business, financial condition and results of operations.”
On this front, DIRECTV notes in its annual report, “In-orbit risks include malfunctions, commonly referred to as anomalies, and collisions with meteoroids, other spacecraft or other space debris….. In the event of a complete satellite failure, our services provided via that satellite could be unavailable for several days or longer while backup in-orbit satellites are repositioned and services are moved. We are not insured for any resultant lost revenues.”
The Boeing Company (NYSE: BA) claims to be the world’s leading manufacturer of geostationary satellites and it manufactures satellites for all walks of the satellite world. It recently acquired Argon ST in the satellite arena. Unless many satellites were simultaneously knocked out or damaged, Boeing is too large and too diversified to get any major benefit from the possibilities of satellite woes based on meteor showers.
Two other companies in the satellite manufacturing and servicing businesses that are direct pure-plays in the satellite industry are Orbital Sciences Corp. (NYSE: ORB) and Loral Space & Communications, Inc. (NASDAQ: LORL). Both companies are small enough ($1.44 billion market cap at Loral and $777 million at Orbital) that any new business as a result of repositioning, relaunching, or reordering of new satellites would actually be a win for either or both of these two.
DigitalGlobe, Inc. (NYSE: DGI) and GeoEye, Inc. (NASDAQ: GEOY) were two recent winners that hit all-time highs after the two received $7.3 billion in combined orders to supply satellite imagery to U.S. intelligence services. Digital Globe has commercial high-resolution earth imagery products and services that are sourced from its own advanced satellite constellation. GeoEye sells international information services to government and commercial markets.
Dish Network Corp. (NASDAQ: DISH) and DIRECTV (NASDAQ: DTV) compete head to head for in-home and in-office satellite ‘cable’ TV subscribers. Each has hundreds of channels. Dish had 14.1 million subscribers at the end of 2009 versus DIRECTV’s 18.5 million U.S. and 6.5 million in Latin America. As of the end of 2009, DIRECTV had a network of 12 geosynchronous satellites and it appears that DISH had more when you include its leased satellites.
Gilat Satellite Networks Ltd. (NASDAQ: GILT) is an Israel-based company which provides Internet Protocol (IP) based digital satellite communication and networking products and services worldwide. The company was founded in 1987 and has shipped over 750,000 VSATs (Very Small Aperture Terminals) to more than 85 countries on six continents.
SIRIUS XM Radio Inc. (NASDAQ: SIRI) is satellite radio monopoly and it ended the latest quarter with some 19,527,448 subscribers. It has multiple satellites between it and the XM network and any single satellite would likely only result in some interruption. Still, any ‘event’ would not be a welcome wagon for Mel Karmazin and friends.
Hughes Communications, Inc. (NASDAQ: HUGH) offers up broadband satellite network services and systems for broadband Internet services via commercial-grade antennas. The company also provides satellite, wire line, and wireless communication networks and services to all business sectors around the globe. The company had about 326,000 subscribers on SPACEWAY 3 as of June 30, 2010 and it has shipped more than 2.2 million systems to customers in over 100 countries. In short, satellite ‘interruption,’ damage, or destruction would not be welcome.
ICO Global Communications Holdings Ltd. (NASDAQ: ICOG) was founded in 2000 to launch and operate a global constellation of communications satellites to support voice and data services to mobile, portable and fixed devices. This is still a developing company where its DBSD North America unit is being restructured and the company will be a minority shareholder upon that completion. The company recently completed a $30 million rights offering and the stock has never really taken off and its remaining ten partially completed MEO satellites were placed in storage when construction was suspended in 2004. It has a case against Boeing which it won a $603 million claim, but that is on appeal and is expected to be concluded next year.
Iridium Communications Inc. (NASDAQ: IRDM) and Globalstar Inc. (NASDAQ: GSAT) are two of the satellite phone service providers that provide satellite audio and data communications. Globalstar has recently taken delivery of the first three second-generation satellites from manufacturer Thales Alenia Space and is expecting three more later this month for what it hopes will be an October launch. With over 400,000 subscribers, Globalstar claims to be the world’s largest provider of mobile satellite voice and data services.
ORBCOMM, Inc. (NASDAQ: ORBC) is a smaller player that operates satellite-based data communications for a two-way wireless data messaging system optimized for narrowband data communications via about 29 low-Earth orbit satellites. It is into space-based Automatic Identification System services. It announced this week that its total revenues for the June quarter were $7.8 million. Despite a 15.8% revenue jump, its satellite network would have to face multiple strikes to really interrupt operations and the odds of that are so low that it is hard to fathom.
Most likely there will be no major fallout from this. If there is, it will be costly. To date, meteor showers and debris showers have brought mostly entertainment at night under clear skies.
Read more: Are Meteor Showers True Risks To Satellite Companies? (BA, DGI, GEOY, GILT, DISH, DTV, SIRI, HUGH, ICOG, IRDM, GSAT, ORBC, ORB, LORL) – 24/7 Wall St. http://247wallst.com/2010/08/11/are-meteor-showers-true-risks-to-satellite-companies-ba-dgi-geoy-gilt-dish-dtv-siri-hugh-icog-irdm-gsat-orbc-orb-lorl/#ixzz0wdtNHxIS