Jim H.

What Would Google Do with GeoEye?

Wow - you couldn't be further from the truth.

Google Earth doesn't want the political liability of owning and operating an imaging system. John Hankee has held this position for a longtime. Simply put, when China or any other country complains they just say the imagery was already available to the public and not something they created. Imagine the difficult position for Google if countries restrict access based on what images they release?

Your second point was even more off the mark. GeoEye is running in this business with a crippled satellite that doesn't work properly. The club foot on GeoEye-1 was the failure of a segment of the color array of the focal plane that only images in black and white. To get full color they need to operate the system in the reverse scan mode. In addition, they had star tracker problems that restrict imaging to only cross-track thus limiting coverage.

DigitalGlobe just launched WorldView-2. That satellite is more agile and not only works for color imagery in both forward and reverse scan modes but has double the multispectral bands than GeoEye-1. Higher downlink rates (more images to the ground), better agility and a system that can scan in any direction (thanks to Control Moment Gyros - CMG's) make WordView-2 a generation ahead of the GeoEye-1 Edsel.

Google is well advised and therefore will likely have no interest in procuring anything from GeoEye. Matt O'Connell sounds like a guy at a garage sale telling you someone just offered him $3,000 for his Elvis costume!

DigitalGlobe IPO Analysis: Investors Should Expect a Choppy 2009

Great analysis. My only question is whether you considered the international competitors?

The French, Russians, Israelis, Koreans and Indians are all now or already have entered this market with their own systems. While not necessarily the same capacity or quality they are also mostly government backed firms that don't need to worry about pesky issues like invested capital and profits to continue competing in the market space.

Has anyone looked at their international competition to consider the non-U.S. Government market they are relying upon for those projected earnings?

GeoEye: Sell Alert on Satellite Troubles

I don't think it is an overreaction. The company has not been willing to fully disclose the extent of the problem. I am not aware of any independent analysis of the problem being provided. The CEO is from CREST and doesn't have a space background so his generalizations don't mean too much.

A credible independent technical review of the problem and its impact on their operation will be the only way investors can fairly evaluate what the impact may be on their future revenue stream.

GeoEye: Back on Track?

With all due respect there are no errors in what I provided you.

Google Earth imagery today is mostly COLOR images from QuickBird (DigitalGlobe's satellite) that is clearly not black and white. That satellite has a resolution of 0.62 meters from an off-axis camera which means it has a higher MTF (more light and better clarity) than GeoEye-1's on-access camera.

DigitalGlobe's second satellite on orbit is WorldView-1. While it is panchromatic (black and white) it was chosen above GeoEye-1 by the U.S. Government to fund first in their NextView program. Why?

Because it has much greater agility (angular velocity) than GeoEye-1. WorldView-1 carries Control Moment Gyros (CMG's) which allow it to image at least 1/3 more area by square kilometers than the much slower GeoEye-1.

The U.S. Government doesn't care so much about color but instead speed and targets imaged. If you look back at the press statements by Bill Schuster (COO of GeoEye) he said they are having problems producing color images on GeoEye-1 so it impacts only their commercial not government contracts.

The U.S. Government will want to capture 100 targets over Iraq and not only say 30-40 by GeoEye-1. The differences in systems that use Control Moment Gyros (CMG) to the older technology of Reaction Wheels is huge and the U.S. Government prefers speed over color.

That means GeoEye can sell its black and white images to the U.S. Government but they collect approximately 1/3 less imaging targets in a single pass thus less revenue than DigitalGlobe for their government contracts on every pass and there are 14 orbits per day at their relative altitudes.

GeoEye is claiming their system is 0.42 meters resolution while the QuickBird is 0.62 meters resolution and WorldView-1 is 0.50 meters resolution. Ask any imagery analyst in the world and they will tell you one cannot distinguish such slight differences in resolution by looking at the image. However, the DigitalGlobe satellites have a higher MTF (due to telescope design and more light to the aperture) thus providing more detail.

DigitalGlobe's new satellite to launch this summer (WorldView-2) will be the clear industry leader by far. It has 8 bands multi-spectral (color) instead of GeoEye's 4 bands. Like WorldView-1 it uses CMG's for agility not like GeoEye-1's old fashioned slow reaction wheels.

Consider that today DigitalGlobe can collect and refresh over 1 million square kilometers per day. After their next system is launched it alone can likely collect more than both the GeoEye current satellites combined. That is just one satellite in their constellation that will soon be 3.

It is also odd that you somehow subtract value from DG because 1 in 3 of their systems is all black and white. GeoEye's only fully functioning satellite they admit is having problems producing color and a replacement satellite is at least 3 years away.

For me its easy. A company with three fully redundant and functioning systems where two are color and two have superior agility and even greater downlink rates etc....compared to GeoEye's one over sold and not working properly GeoEye-1 and the oldest system up there now operating on limited scheduled IKONOS.

Lastly, consider DigitalGlobe has two functioning and one soon to launch systems from the same company that just built the new Hubble Telescope upgrades while GeoEye 's problem new system is the first of its kind ever built by Spectrum Astro (now part of GD) so there is no proven heritage of their system design lasting in space.

My hat is off to GeoEye for their superior investor relations and PR spins. For my money I wouldn't even take a bet they are in business three years from now as the risk is too high. DigitalGlobe also has risks but nothing compared to their much junior performing competitor GeoEye.

GeoEye: Back on Track?

P.S. to previous post -

I say Ball Brothers because they build remote sensing satellites while most companies in the industry can only build weather and communication satellites.

The capability is limited to less than 5 companies most of whom charge over $ 1 billion to build such a system. Since 100% of production and thus revenue relies on the quality of the space asset - investors need to look more carefully at the space assets of the company. Its not like buying the wrong truck in a trucking company or aircraft in the airline industry. Once you spend your money and launch a system you are committed to that solution.

Therefore, GeoEye will be in deep trouble if they cannot find a reliable supplier or get their current "first model" from General Dynamics to work the way it was intended to in the design phase.

GeoEye: Back on Track?

As someone very familiar with the technology and industry I found both yours and Kramer's analysis faulty. Let me first disclose I am not invested in either company stock.

Kramer said several times in his bit on DG that they are "catching-up" with GeoEye. This isn't the case at all. GeoEye has two high resolution satellites now on orbit (IKONOS & GEOEYE-1) while DG is launching its 3rd this summer (QuickBird, WorldView-1 & WorldView-2).

IKONOS is LONG past its mission and design life. For those non-technical folks it is like a nearly blind three legged dog hoping along while their new satellite (GeoEye-1) is already in trouble. Hardly a place where I would want to put money.

GeoEye doesn't have a reliable satellite provider. IKONOS was built by Lockheed Martin which lost millions before selling out its company Space Imaging to GeoEye along with the crippled asset IKONOS.

GD built the now flawed GeoEye-1. The instrument was built by ITT and the satellite bus (platform) by a company recently acquired by GD named Spectrum-Astro in Arizona.

Rumor in the industry is that GD lost $100 million on the project and given the liability not interested in trying it again (this was their first high resolution imaging satellite). GeoEye's former satellites were built by Orbital Sciences who they sued when they went bankrupt under their previous name of OrbImage.

Now did you think I like DG? It is OK but their soon to be launched satellite is carrying a nearly identical payload (camera) as the GeoEye-1 satellite that has problems. They were reported in Space News (industry publication) as saying it is different and don't expect the same problems.

Guys, the problem with space is the only problems you can fix on orbit are software errors. All the hardware is beyond reach and no matter how minor the problem you cannot tighten a screw, re-clean a part or even replace a minor welding problem once it is launched at some 800 kilometer above the earth.

Look at their HARDWARE SUPPLIERS. Buying something for space from any company that is building that system for the first time is terribly riskier than you can imagine. If I did invest, my money would be on DG (DigitalGlobe) given their solid track record, good business ethics and SUPPLIER who knows satellites better than most anyone - Ball Brothers Aerospace.