|CEO Speaks, His Coordinates|| |
“We have a unique business model with a large international network”
says Matthew M O’Connell, CEO, President and Director, GeoEye
From 2006 to 2010, it has been quite a journey for GeoEye. What were the highlights of this incredible journey?
It’s hard to believe how far we’ve come. Just 7 ½ years ago, GeoEye had 60 employees generating $9 million per year, and our equity was worth zero. Now, we’re 560 employees generating over $300 million per year, and our equity is worth almost a billion dollars. In a very short time, we went from bankruptcy to Fortune Magazine’s list of the 100 fastest growing companies in America.
Early 2006 marked a year of change and incredible growth for GeoEye. We acquired Space Imaging from Lockheed and Raytheon in late 2005. The acquisition of Space Imaging gave us a great satellite – IKONOS, key channel distribution in the form of 10 international partners and the critical mass we needed to compete.
We merged with Space Imaging and re-branded ourselves as GeoEye. Incidentally, we paid off the $58 million we paid for Space Imaging in one year out of operating cash flow. That’s amazing, when you consider that just three years earlier we couldn’t raise $7 million to get out of bankruptcy.
I think our greatest success through that period was beating a combination of three huge companies—Lockheed, Raytheon and L3—for that $500 million NextView contract. We worked hard. We listened to the customer. We gave the customer what they wanted.
Of course, we launched GeoEye-1, the world’s highest resolution commercial Earth-imaging satellite, in 2008, and it became operational in 2009. Winning the National Geospatial-Intelligence Agency’s $3.8 billion EnhancedView award in August 2010 was another huge milestone for GeoEye.
The contract for the development and construction of the GeoEye-2 satellite and associated command and control systems has now been finalised. Once the satellite is operational in 2013, what will be the added benefits for the customers?
When GeoEye-2 begins operations in 2013, it will be the world’s most accurate and highest resolution commercial satellite, with resolution at 33 centimeters. In addition, the satellite will have significant improvements in performance capabilities, such as enhanced tasking and the ability to collect more imagery at a faster rate. The improved resolution, along with greater agility and manuverability, will allow GeoEye-2 to collect more point targets. This will help us keep up with increased global demand for imagery collection in the commercial and government markets.
Also in 2013, we’ll begin work on GeoEye-3 to replace GeoEye-1 in the 2017 timeframe. GeoEye-2 and GeoEye-3 will expand our constellation, and they’ll provide continuity for our imagery collection business.
From satellite imagery to aerial imagery to solutions, what would be the next step in the ever-expanding GeoEye portfolio?
As GeoEye evolves, we are seeing increased demand for information services. We’re developing new online tools, like our Web-based information dissemination platform, EyeQ™, to make imagery more accessible to our customers.
In addition, we recently announced that we are acquiring the industry’s leading geospatial predictive analytics company, SPADAC, Inc. SPADAC provides solutions that enable customers to analyze where activities or events may occur that will affect, or are critical to, their day-to-day operations. They do this by combining location-based information, geographic data and historic events with a wide range of other information sources. By combining our industry-leading imagery collection capabilities with location-based analytics, we can help our customers gain unprecedented insight about the areas in which they operate.
We have a wealth of collective knowledge through our own work, and, more importantly, through the work of our partners. Our goal is to leverage that knowledge and apply it to new products, services and relationships. Increasingly, one company cannot get its arms around all the innovation and all the applications for location-based information. This is definitely the time and place for collective innovation. One of GeoEye’s key goals is to create value for our stockholders by achieving sustained growth across our business, both organically and through acquisitions.
We have seen many picture perfect imageries from GeoEye. On an average, what percentage of imagery is unusable due to cloud cover?
We generally consider imagery with more than 20 percent cloud cover to be unusable, and that includes approximately 35 percent of the imagery we collect. This means that about 65 percent of the imagery we collect is usable, with less than 20 percent cloud cover.
Some customers accept higher cloud cover, if they can view their primary area of interest in a highly cloud-covered image. Some customers may find that multiple cloud-covered images stacked on top of each other will meet their demands.
Which regions have seen higher demands for satellite imagery in the last one year?
Russia, Ukraine and Belarus have seen the highest change in demand for new collection in the last year.
For example, in May we announced that we signed a multi-year, multi-million dollar contract with our Russian reseller, ScanEx Research and Development Center, for more than two million square kilometers of high-resolution satellite imagery. The world’s first commercial high-resolution satellite, IKONOS, is capturing imagery of infrastructure facilities, major population centers and tourist locations over Russia and neighboring areas.
The areas of highest demand are always the Middle East and Far East, since we have regional affiliates in addition to other business in those areas. Generally, areas of conflict, borders, bounty and major disasters generate the highest demands for satellite imagery.
What do you think are the reasons for the immense success of the commercial satellite service providers like GeoEye, given that many countries have their own Resource Satellite Systems?
One reason for our success is we have a unique business model with a large international network of major partners, which includes commercial, government and non-government entities. They purchase our imagery and data, which saves them the high cost of developing their own space-based imagery systems. They also receive reliable service without overhead of development and maintenance costs. Several of these partners and affiliates are part of our heritage – they have been with us for 10 years or longer. Today, we have more than 96 international resellers and distributors, and that number continues to increase. We opened GeoEye Asia in Singapore to be closer to our customers and provide support to our partners in North and South Asia and India.
We also own one of the largest commercial color archives in the world, which contains more than 483 million square kilometers of color imagery of the Earth. The combination of our highly accurate satellite and aerial imaging assets, our high-resolution image processing and production facilities—especially our multi-source production capability—and our color digital imagery library differentiate us from other providers. This combination also enables us to deliver a comprehensive range of imaging products and services to our diverse customer base.
Could you please elaborate on the role of the GeoEye Foundation?
In 2007, we established the GeoEye Foundation, a 501(c)(3) non-profit organization, on the belief that we have an obligation and social responsibility to share GeoEye’s technology and resources.
The mission of the Foundation is to foster the growth of the next generation of geospatial technology professionals. The Foundation provides satellite imagery to students and faculty at educational institutions to advance research in geographic information systems and environmental studies. It also offers imagery to non-government institutions to support their missions of humanitarian support and environmental research.
Since the Foundation’s creation, professors and students have used GeoEye’s imagery awards to study archaeology, coastal zone management, land cover assessment, climate change, forestry, geospatial intelligence and many other areas of interest. Non-governmental organizations have used our imagery for humanitarian relief and disaster response. These entities are doing important, interesting work, and we’ve published a number of their case studies on our Web site. It’s satisfying to know that we’ve contributed to their successful research.
GeoEye has shown strong revenue growth and operating margins in the recent months. Would it be correct to say that GeoEye has crossed over the economic slowdown of the last couple of years?
We believe that the worldwide imagery demand for surveillance and change monitoring will continue to resist recessions. Our satellite imagery helps many countries and companies around the world monitor their infrastructure and region-of-influence. By purchasing our imagery and data, they save money on the high cost of developing their own space-based imagery systems.
Even in these uncertain times, GeoEye is hiring. We expect to add at least 100 new jobs in our new headquarters location just outside Washington, D.C., over the next three years. It’s finding the right people with the right skill sets that could prove to be a bigger challenge than the economy.
It’s crucial for the geospatial industry that more students focus on the STEM disciplines – Science, Technology, Engineering, and Math. We’re going to need all the bright young minds we can find to help us keep up with our current growth rate, and to deliver the imagery that our customers need to develop, monitor and protect their interests.