Anyone who's used Google Earth has likely seen images from GeoEye, a Dulles, Va., Earth-imaging company. The Internet giant allows users to zoom in from a view of a continent to a car on the street by using images from GeoEye, along with ones from competitor DigitalGlobe, the U.S. Geological Survey and elsewhere.
GeoEye has used its flagship Ikonos satellite to provide images for Google and the U.S. National Geospatial-Intelligence Agency (NGA), its biggest customer. But those customers - and investors - have been waiting for GeoEye-1, the company's newest satellite, to become fully operational.
GeoEye-1 has faced delays from launch to operation, and as a result, the company has been missing out on revenues under a new NGA contract.
GeoEye-1, a two-story-tall satellite built by a contractor team led by General Dynamics Advanced Information Systems, is the world's highest-resolution commercial Earth-imaging satellite, according to the company. The first image the satellite took was of Kutztown University in Pennsylvania; a tennis player is visible about to serve the ball.
GeoEye-1's launch, originally planned for the first quarter of 2007, finally took place last Sept. 6. Work went slower than planned, then the launch was bumped to allow Boeing Launch Services to give priority to a U.S. government launch. Once in orbit, the satellite suffered from delays in calibrating its accuracy and testing its software. The process, which normally takes up to three months, has lasted five so far, according to GeoEye spokes-man Mark Brender.
GeoEye has told investors for several months that the company is nearing the end of this phase. Matt O'Connell, the company's president and chief executive, said the GeoEye-1 satellite should be fully operational at least by the end of the first quarter of 2009, though GeoEye is aiming for sometime this month.
"We're still in the process of fine-tuning the accuracy," O'Connell said. "You make a change, you do a couple of orbits, you look at the imagery, you test it, you find what you think might be a bug, you do another change. So it's an iterative process, so it takes a while."
The process now is focusing on aligning the positional accuracy of the satellite with the GPS grid, he said. "We're all disappointed that it hasn't gone faster. But we're excited that we are nearing the end of the tunnel."
O'Connell said testing that he's seen lately makes him more confident that GeoEye-1 is getting closer to becoming fully operational, as more glitches are eliminated and the satellite is "hitting accuracy levels that are near our target."
What's hanging in the balance is a new Service Level Agreement with the NGA that would boost GeoEye's revenues. Once GeoEye-1 is operational and the NGA certifies GeoEye-1 images as meeting the agency's standards, NGA will buy $12.5 million in GeoEye-1 images a month under its NextView program. That will give GeoEye a consistent revenue source after somewhat bumpy revenues in recent quarters. Revenues were down 24 percent to $106 million for the first nine months of 2008.
GeoEye's competitor, DigitalGlobe, won the first contract under the NextView program. Its satellite, WorldView-3, provides black-and-white images to NGA.
"We're comfortable the GeoEye is on a path that's going to have [GeoEye-1] operational and available for NGA taskings," NGA spokesman Dave Burpee said.
In the meantime, the NGA and Google keep buying images from Ikonos, which was launched in 1999 by GeoEye's predecessor company, Space Imaging. GeoEye was formed in 2006 when OrbImage, a company O'Connell also headed, bought Space Imaging, a Lockheed Martin-Raytheon joint venture.
GeoEye also still gets images from an older satellite, OrbView-2, which provides relatively coarse images used in environmental science and by the fishing industry. About 30 percent of GeoEye's revenue comes from business with governments outside the United States.
GeoEye already is anticipating the end of GeoEye-1's life in seven to 10 years. Ikonos will wear out sooner. GeoEye is progressing on GeoEye-2, and ITT, the builder of the cameras for Ikonos and GeoEye-1, has started building the camera for GeoEye-2, set for launch as early as 2012.
With that satellite, GeoEye hopes to get to a resolution of as sharp as 0.25 meters per image pixel. GeoEye-1's resolution is 0.41 meters for black-and-white images and 1.65 meters for color images.
The nature of GeoEye's business, plus delays with GeoEye-1, make its stock a somewhat risky investment in a climate where investors are more risk-averse, said Daniello Natoli, an analyst with financial firm Matrix USA in New York. The firm has a strong sell rating on GeoEye's stock, based on its method of rating stocks based on economic earnings generation.
"I think there is a fair amount of expectation that [GeoEye-1's imagery] will be approved" by the NGA, Natoli said. But further delays "likely will be a negative catalyst for GeoEye."
But, said James McIlree, director of research at Collins Stewart in New York, "Most people are looking at this and saying, 'I have some degree of confidence that the mechanics on the satellite work. And if that's the case, then I have some degree of confidence that they can get the software to work. Then I know at some point this thing is going to work, and when that happens, assuming it's in a reasonable period of time, there should be a sharp increase in revenues and cash flow.'"
E-mail: aboessenkool@defensenews.com.
The Army's Future Combat Systems (FCS) program is ready to test a few components that soldiers may have in their hands by 2010.
Help
