Chris Fernandez

GeoEye: Sell Alert on Satellite Troubles

Hey Userxxx,

I completely disagree with your assessment that the risk/reward was worse before the satellite was launched.

You see, back then, the stock was LOWER than where it trades at today, and let's say for the sake of argument, that it was trading for about the same price.

Well, even at the same price, with what we know today, the risk/reward has changed and is no longer in our favor based on the knowledge that we possess right now.

I won't back down from my sell of GEOY, and from the looks of the market, DGI is getting a higher valuation right now, with both properties undervalued if you ask me, while at the same time factoring in the higher risk premium on GeoEye.

China: I understand where you are coming from, but within the boom and bust times of the satellite construction cycle, there is a sweet spot in there (the government subsidies notwithstanding), where the company would generate huge amounts of free cash flow sufficient for continuing operations and satellite build out.

With the government subsidies, we can see that things look much brighter, especially within the context of future deals as the US looks to continue to outsource their satellite imagery needs to commercial players.

Chris

GeoEye: Sell Alert on Satellite Troubles

I agree with Jim,

Until I see something official, not some CEO interview on the internet somewhere, I maintain that my sell was warranted for all the reasons that I mentioned, today's stock price rise notwithstanding.

I can always reenter the position later, so selling the entire position now and hanging back isn't the worst thing in the world, considering I was still able to get out with a gain in the face of such risk and uncertainty.

I'll put it this way:

GeoEye's risk/reward proposition no longer favors the investor.

That's when I tend to exit a position as I have.

Chris

GeoEye: Back on Track?

Hey Jim,

Very valid points, but in the grand scheme of things, the government contracts will be the same regardless, and GeoEye and DGI's revenues will virtually match eachother, so in the end, the points are moot as far as the pure numbers go.

Also, you are failing to take into account that satellite launches are very fragile things, and not only is DGI's satellite likely to be pushed back as they always tend to be, but something can go catastrophically wrong with the launch, check out, calibration, and orbit, all real risks right now as the satellite is not a sure thing, as GEOY's already is.

Now as for the dynamics of imagery collection, as well as how much land mass can be scanned, that is true that DGI has superior capabilities, but here again you failed to address GeoEye's imagery processing capabilities which blow DGI out of the water.

They are image agnostic, and are able to parse and format imagery from any vendor/source not just their own, and are expanding this unit by 120 staff members.

Lastly, I addressed the MJ Harden division that also expanded on purchased a new aircraft and camera that you failed to address as well.

Admittedly, this division is a small portion of sales, but if you add up the increased imagery parsing capabilities as well as increased MJ Harden order flow, and you get a nicely diversified business.

I just actually sold my GeoEye position today as a result of uncertainty with the imagery problems with GeoEye-1, as well as falling stock price, and will look to get in at a later time.

Chris

GeoEye: Back on Track?

Jim H,

I would like to point out a few errors in your own assessments of GEOY vs. DGI.

First off, if you look closely, you will notice that DGI's satellites that are currently on par with GeoEye are for Black and White imagery only.

Their newest one will make them on par with GEOY in terms of color vs. color resolution, but until that happens, GeoEye has the advantage.

It is true that IKONOS is on its last legs, but until it dies, it provides free revenue, as GeoEye can service all of their customers via GeoEye-1, so anything IKONOS delivers is bonus, and free cash flow.

As for the faulty equipment, it is what it is at this point, and now we have to look at the investment thesis from this point forward.

As I have stated multiple times on my blog, and Twitter feed, GeoEye is looking shaky from a technical perspective, with news to back up the weakness, and I am ready to sell the shares if it breaks below certain key areas.

Risk is one thing, but unwarranted risk is quite another. I plan on protecting my gains in GEOY and letting the satellite malfunction play itself out from the sidelines if it comes to that.

Chris

The Risk Is Back in GeoEye

Hey Collins,

Thanks for the feedback, I appreciate it.

I have since rethought some of my GeoEye investment thesis:

peakstocks.com/digital...

as the stock continues to sell off...I am very leary of holding on here and watching it go down to the mid teens again.

Stay tuned to my Twitter feed for real time updates if I do decide to sell, as GEOY is approaching its 50 day, and then 200 day SMA, and it's looking like we might have a technical breakdown here.

In light of the camera malfunction, this is not good news.

Stay tuned,
Chris

twitter.com/PeakStocks

Rick's and Netflix: A Time to Buy, A Time to Short?

Missing_Link,

I agree 100%...I shorted NFLX today as well, and in fact since SA posts my stuff a day later, if you are interested in following my picks live, you can get real time updates by subscribing to my Twitter Feed here:

twitter.com/PeakStocks

Thanks for reading, and happy trading!

Chris

Rick's and Netflix: A Time to Buy, A Time to Short?

Hey Dicki,

For every trade there is a buyer and a seller...both think they are right, and in the short term, both can be right.

I am looking at short term only.

NFLX will most likely fall some here, we can make a quick 5-10% on our money, and get out. My stop loss is about 5%, so the risk/reward is vastly in our favor all things considered.

Indeed time will tell!

Chris

Key Assumption for GeoEye: Forward Earnings

Hey Eric,

I don't think that EPS will be that high because of depreciation expense as a result of GeoEye-1.

What you need to look at is the EV/EBITDA, which adds that back in, and using that metric, along with cash flow and potential free cash flow generation, I agree with your overall assessment that GeoEye is still too cheap, albeit not as cheap as it was when it was trading well below $20 a few weeks ago.

Chris

GeoEye: Back on Track?

Sure, but these are all very minor adjustments.

What matters is how things looked at the end of 2008, and more importantly for us, now that GeoEye-1 is fully operational, and providing usable imagery, what are the numbers looking like as we speak?

Also, today GeoEye announced an expansion of their MJ Harden subsidiary which I feel is good news and compliments their satellite operations well.

Chris

GeoEye Earnings Preview: Why the Silence?

Actually GeoEye finally updated us that they filed a late 10-K extension with the SEC...it should be due no later than April 1st, and in that time frame, I would also look for their earnings release.

Chris

GeoEye Earnings Preview: Why the Silence?

Hey snail,

LOL, you aren't completely talking to yourself! See they put my little picture in here so you know it's actually me replying!

At any rate, the CEO never gives forward guidance, nor does the company...that's purely from analysts. IF the CEO did say that, it was probably a broad strokes statement based on saying that the GeoEye-1 satellite would yield them much higher revenue than in the past.

Finally, because of GeoEye's business model, any revenue spike typically drops straight to the bottom line, and shows up in a huge way in free cash flow, and cash flow generation as the company has to take a hit on the front portion of the earnings announcement in the form of amortization and depreciation expenses, but gets that back on the cash flow side, and thus GeoEYe should never be valued purely on a PE basis, but on a EV/EBITDA basis, and on cash flow, and margin multiples.

When you look at what they did in 2007 before their revenue declined, you'll see they generated gobs of free cash flow, and their margins were fat. I look for that to resume immediately.

Chris

GeoEye: New Satellite's Imagery Approved by NGA

Hey Glen,

Did you cash out of your options and convert them instead to common stock?

I would take the quick move and exit your short term position, and turn it into a longer term one for the ride up to $30 that might take 6 months or so.

As for an IR contact, I believe there is an interim CFO that is available for those questions and concerns right now.

I used to talk to Henry Dubois the ex-CFO, but now the interim CFO is taking those calls as well as the CEO which I did an extensive interview with that you can find on my website.

Chris

GeoEye: 10 Thoughts on What's Going On

Hey Collins,

Yep, this is good news indeed, now for the final cert., which should provide another good pop in the stock price as well.

You are most welcome for the work that I do...stocks are a passion of mine, and Iove "discovering" small companies like GeoEye that are grossly underrvalued.

Chris

GeoEye: 10 Thoughts on What's Going On

Hey Collins,

It looks like none of that matters anymore as today the company finally released GeoEye-1 images for commercial purchase, and submitted them to the NGA for final approval for the Service Level Agreement.

Looks like we are golden now.

Chris

Rick's to Open Nude Bar, GeoEye Helps Catch Pirates Off Kenya

Hey Collins,

Sure, no problem, and thanks for asking.

My rationale is based on several things: talk that I have been hearing from analysts, the street, message boards, intuition, and GeoEye's own press releases.

Put them all together, and I get a distinct sense that GeoEye hasn't even fixed their problems yet of the imagery, let alone asked for it to be certified.

Therefore, since they haven't even addressed the software problems full force yet, once they do, they will still need to get approval for the imagery.

All that being said, I see a substantial delay taking place, above and beyond the present delay, which would put us already into the middle of Q1.

I like to take a worst-case scenario approach, thus I would be happy if the imagery were certified by the end of Q1, rather than not at all.

All this is based on speculation, and not fact, so please do your own digging around to verify the facts to your liking, but as far as I can tell, this thing might take awhile.

Chris