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Geoeye and DigitalGlobe: Eye on growth

USA, 17 February 2007 – GeoEye Chief Executive Matthew O’Connell is preparing for the company’s first launch since purchasing Thornton-based Space Imaging, and he has his eye on more acquisitions and growth.

Space Imaging was backed by Lockheed Martin Corp. and Raytheon Co., so integrating its staff with GeoEye’s involved shifting them from a big aerospace mentality and cutting through bureaucracy. “We have tried to get away from the more hierarchical structure that was here,” O’Connell said.

GeoEye kept about 85 percent of Space Imaging employees, he said. It now has about 120 employees in Thornton and about 300 company-wide. Employees in Thornton control the IKONOS satellite and will help with the GeoEye-1 satellite. With offices in Thornton and Dulles, O’Connell said he plans to stay with the company.

Space Imaging was acquired as the satellite imagery industry struggled, in part because the commercial market has not developed as expected. GeoEye is now profitable and recently paid off the Space Imaging acquisition debt, making it easier to consider growth.

“We’re looking at a lot of opportunities to acquire,” said O’Connell, adding that he wants to focus on turning imagery into useful information – creating more reasons for companies to buy the imagery. And, “we’ve already started looking at future satellites,” he said.

– Eye on growth
Dulles, Virginia, based GeoEye and rival DigitalGlobe Inc. in Longmont, the two largest U.S. players in the satellite imaging industry, both plan to launch new high-resolution imagery satellites this year. “There has been sort of a race as to who’s going to launch their next new birds first,” said Edward Jurkevics, Principal with Chesapeake Analytics, who follows the industry. Both have encountered delays.

The launch of the GeoEye-1 satellite, originally expected this spring, has been delayed until fall. When it does launch, it will be the company’s highest-resolution satellite, with an expected life span of more than 10 years. Meanwhile, DigitalGlobe’s recent acquisition of GlobeXplorer expanded its capabilities with Internet distribution and aerial imagery.

Jurkevics said the model of selling rights to a foreign ground station operator restricts the companies’ ownership of imagery, so companies may move toward more ownership of those stations where imagery is collected in other countries.

Aside from its upcoming launch, other key hurdles for GeoEye and the rest of the industry include funding of future satellites from the National Geospatial-Intelligence Agency. Currently, the federal government pays about half the cost of getting a satellite into space.

The government agency wants to continue supporting commercial remote-sensing satellite companies by buying imagery, “but that exact mechanism … we don’t know,” said NGA spokesman Dave Burpee.

Eventually, “We hope the industry becomes robust enough that they don’t need government money up front to get things up into space … that they become strong enough, that they become profitable enough that they can launch their own,” Burpee said. “But we’ll see.”