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Gilat Satellite Networks - Undiscovered Investment In Satellite Communications

Gunther Karger profile picture
Gunther Karger
26 Followers

Summary

  • Satellite communications accelerates the Global Village.
  • Satellite communications enable new military systems like drones and unmanned surface vehicles.
  • Small cell satellite backhaul enables cellular service for unserved and under-served areas.
  • Consumer-based satellite customer premises equipment enables Internet anywhere.
  • Gilat Satellite Networks is a leader in this "space" repositioned to accelerate future growth.

Undiscovered Investment in Satellite Communication Networks

First, let's all make sure we know something about Gilat Satellite Networks (NASDAQ:GILT), the industry it serves, why I believe solid long-term growth lies ahead. I'll also say right upfront this brief report should not be considered an "analyst report" full of numbers written for other analysts and investment professionals. It is written for you!

The Evolution of Commercial Satellite Communications

The commercial SATCOM industry was launched in 1965 to provide a few basic telephone and TV circuits for AT&T and a few TV stations. Over the years, satellites became important long haul transmission facilities for telephone companies eventually providing satellite networks via VSAT (Very Small Aperture Terminals) networks for businesses dispersed over a wide areas spanning even continents. This included gasoline stations, restaurants, banks, distance learning and indeed any business spread out over a wide area. The VSATs offered such companies an alternative to using the telephone utilities and their government controlled regulations.

This industry matured over the years until recently when technology advances inclusive of the Internet replacing the switched network created a whole new set of uses for satellite-based communications, some of which are emerging as this report is written.

Internet Aboard Commercial and Corporate Passenger Aircraft

Soon, passengers aboard commercial airplanes (already aboard corporate jets) will be able to use their laptops, smartphones, tablets with a wireless capability to communicate just as now done in your home, office, car, etc. This is already being implemented by Boeing with Honeywell as prime contractor (GlobalXpress) and should be available on airplanes soon. It already is available aboard private corporate jets. Gilat Satellite Networks is Honeywell's provider of the aircraft to satellite microwave communication system.

Satellite on the Move (SOTM)

Satellites and Ka band (very high frequency microwave equipment designed to operate in the

This article was written by

Gunther Karger profile picture
26 Followers
Personal: Born in Germany, raised in Sweden, married 60 years Education: Electrical Engineering, LSU, major in Communications Diplomas/certifications: business administration, Financial services Series 7, 24, investment adviser(retired registrations, Certified Arbitrator(NASD/FINRA no longer active) Professional: Senior Life Member of IEEE, Past Chairman of IEEE Communications Society(New Jersey), Cape Canaveral Section, Managing Editor of IEEE communications Newsletter Scientific/corporate Experience: Communications engineer in satellites, networks, intelligence, space exploration . Corporate management Investment experience: Founder and Editor of Discovery Letter(published for 20 years), broker, branch manager, NASD Arbitrator, compliance officer, TV panelist Honors: Certificate of Appreciation from the Chairman of SEC, 2013 Outstanding Young Man of America, 1967, Proclaimed as "Gunther Karger Day of miami Dade County, May 17, 2011 Speaking/author: Lecturer aboard major cruise lines (2003-2006), author of "Thieves on Wall Street", 1995, "Wall Street & Govt Fraud" 2005, "My Life-Rising from the Ashes of the Holocaust and Global Society Rising, 2014, Columns on investment ethics in business publications.

Analyst’s Disclosure: The author is long GILT. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

Gunther Karger profile picture
Gilat and global satellite operator Inmarsat announced a joint program where Inmarsat's new GlobalXpress satellites will deliver broadband internet using Gilat's new SkyEdge satelite based broadband system. This allows internet service to be delivered via any VSAT globally especially significant to under served and unserved areas and private enterprise networks. There also was a news story in Peru recently that the Peruvian government approved the financing of the recently awarded $285 million country wide broadband systems (to Gilat) expanced to $345 million. Check the Gilat website for complete updates on news and offerings. http://www.gilat.com
Gunther Karger profile picture
Today's 1st qtr results although flat to somewhat negative reflect the transition to the new management led by Dov Baharav, Interim CEO and chairman who personally bought a 2% stake in GILT @ 4.95 along with FIMI Private Equity fund which bought about 5 million shares also at $4.95 last fall from York Capital. So now, Gilat is led by a CEO who actually paid his own money along with a fund with controlling board representation just at the time when the company is starting to book large new businesses one being the $285 million infrastructure project in South America. The 1st qtr revenue of $45 million reflecting an annual runrate of $180 million should be viewed in context of the projected $260 million for the full year which is equivalent to $65 million per qtr.
The business today also is dramatically more diversified via its markets which includes satellite mobility systems including defense, commercial passenger airplane internet access, cellular backhaul via satellite all over the globe. Investors should be also aware that this stock can be very volatile given the very high institutional holdings and therefore a low float in shares.
Gunther Karger profile picture
Gilat has been "dead" for years since the tech bust in 2000 which is 15 years ago although it has risen somewhat recently from its lows on the $285 million contract.
However, 42 million shares is not high and the float is very low given the 70% institutional. While Gilat may have been dscovered by a couple of major institutions, my report targets the general individual investor community. Finally, the company today is a different company with its founders gone.
gingerlov profile picture
Not sure if it's "undiscovered"? Seeing as the high was over $3,000/share back before the first tech bust.

Also, the reason for the "low number of shares outstanding" is because of a reverse split after it crashed and burned...
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