Lockheed Sees Growth In Commercial Space
Lockheed Martin said its commercial satellite division has joined the company’s bigger government-satellite construction business as a growth engine and that the launch-vehicle business is also likely to increase in 2006.
Bethesda, Md.-based Lockheed Martin, in an Oct. 25 conference call with financial analysts, said its overall Space Systems business reported an operating profit of $154 million on sales of $1.68 billion for the three months ending Sept. 30 — an increase of 36 percent and 17 percent, respectively.
“Space Systems [profit] margins have reached the 9-percent level for the first time in a long time and we expect to sustain those levels,” Lockheed Martin Chief Financial Officer Christopher E. Kubasik said. “Space is fundamentally a more attractive business than a few years ago, with less risk and a positive outlook for growth, expanding margins and strong operating cash flow.”
For all of 2005, Lockheed Martin expects its space business revenues to total between $6.5 billion and $6.8 billion. In 2006, the division’s revenues are expected to increase by 15-20 percent, to between $7.5 billion and $8 billion.
Lockheed Martin work on U.S. Defense Department programs accounts for more than half of the Space Systems unit’s revenue . This government business is growing by 10 percent per year with improving profit margins, Kubasik said.
It has been the commercial satellite sector that has been a drag on the Space Systems results. Kubasik said that while the commercial satellite business is not expected to approach the profitability of the government side — low single-digit profits are the rule — it too is improving despite the fact that the company has made no commercial satellite deliveries so far this year.
Lockheed Martin books sales when the deliveries are made. If no satellites are delivered to customers, no revenues are reported. Meanwhile, operating expenses are reported each month.
Kubasik said between five and seven Lockheed Martin-built commercial satellites are scheduled for delivery in 2006.
Lockheed Martin builds the Atlas 5 rocket and is a majority shareholder in International Launch Services of McLean, Va., which markets the Atlas 5 and Russia’s Proton-M rocket.
Six or seven launches are expected to be conducted in 2005. For 2006, the company is forecasting between seven and 10 launches, Kubasik said.
The company is forecasting launcher-related revenue of $850 million in 2006 assuming it completes seven to 10 launches. As of Sept. 30 it had an Atlas 5 launch-vehicle backlog of $1.5 billion covering 12 government and two commercial launch contracts, Kubasik said.
XM Grows at Fast Pace But 3Q Loss Also Widens
XM Satellite Radio Inc. saw its losses grow during the last quarter even as its revenue and subscriber base were growing. Revenue increased 134 percent, as the company added 617,152 new subscribers in third-quarter 2005.
XM Chief Executive Officer Hugh Panero said during an Oct. 27 conference call with financial analysts that the company ended the quarter with more than 5 million subscribers .
“It took us two years to get 1 million subscribers and we’re going to add that many subscribers in the [next] quarter alone,” Panero said.
New York-based firm SG Cowen & Co. also predicted in an Oct. 18 analysis that both XM and its competitor, Sirius Satellite Radio of New York, will each attract 1 million subscribers next quarter.
Washington-based XM earned $153 million in revenue for the quarter, up from the $65 million it reported for third-quarter 2004. Its overall net loss for the quarter, however, was $131.9 million, compared to $118 million during the same time last year.
Panero said this is the first quarter the company is starting to see increased revenue growth from its decision to raise subscription prices. Beginning April 2, 2005, subscription prices went up from $9.99 per month to $12.95 per month.
The company continued to add additional subscribers through its agreements with auto manufacturers to install radios in new cars. Panero said that in 2006 General Motors and Honda will produce a total of more than 2 million cars that will have factory installed XM radios.
Sirius will announce its third-quarter results during a conference call with investors Nov. 1.
Northrop’s 3Q Space Revenue Grows 2%
Sales for Northrop Grumman’s Space Technology unit grew 2 percent in the third quarter, to $842 million compared to $823 million for the same period last year. The operating margin increased to $67 million compared to $57 million a year ago.
Civil space, along with intelligence, surveillance and reconnaissance (ISR) programs drove the increased sales, Wes Bush, Northrop Grumman’s chief financial officer, said during the company’s third-quarter conference call for investors Oct. 25.
In its filing with the U.S. Securities and Exchange Commission the company said the higher civil and ISR sales were partially offset by lower revenue from its Missile & Space Defense and Satellite Communications programs.
Civil Space revenue increased 23 percent, due to higher volume from the company’s contracts on NASA and the National Oceanic and Atmospheric Administration programs. ISR revenue rose 6 percent due to higher volume in restricted programs.
The company reported $74 million in revenue from its work on the U.S. Air Force’s Advanced Extremely High Frequency satellite communications program, the filing said.
“We expect space to be another good, solid performer for next year,” Bush said, noting the company is optimistic it may be chosen as a contractor for the Crew Exploration Vehicle (CEV), for which it has teamed with Chicago-based Boeing Corp. The contract for the CEV is expected to be awarded in April 2006.
Overall, Northrop Grumman Corp. saw its consolidated sales and earnings negatively impacted by Hurricane Katrina; the company’s Ship Systems facilities are located on the Gulf Coast, chief executive officer Ron Sugar said during the call. Sales for the company were essentially flat, coming in at $7.45 billion for third-quarter 2005, compared to $7.41 billion for the same time period in 2004. Regardless, net income for the quarter increased to $293 million, up from $278 million in third-quarter 2004.
Swanson Bullish on Space Even if U.S. Cuts Budgets
Raytheon, Inc.’s chief executive officer predicted the company will still get plenty of business in the space market even if government budgets end up constrained.
During an Oct. 27 conference call with investors, Raytheon CEO Bill Swanson characterized the space market as fluid. He said Raytheon has focused most of its space work this year in its RF Components division and on electro-optical infrared sensors.
“We think for us that’s the core capability that we have, and one that our customers want us to be a part of,” Swanson said.
Swanson said that Waltham, Mass.-based Raytheon expects to have continued success in a number of proprietary and classified projects related to space.
In the space and airborne system segment of the business, net sales came in at $1.01 billion, up from $929 million in third-quarter 2004.
Overall, Raytheon’s net sales for the quarter were $5.3 billion, up 8 percent from $4.9 billion in third-quarter 2004.
ESA Robot Arm to be Modified for Proton Launch
A 630-kilogram European robotic manipulator arm designed to be transported to the international space station aboard the U.S. space shuttle will be modified to permit a late 2007 launch aboard a Russian Proton rocket , the European Space Agency (ESA) announced Oct. 27.
The European Robotic Arm (ERA) will be sent to the station on the Proton flight carrying Russia’s Multipurpose Laboratory Module. ERA was built by Dutch Space B.V. of Leiden, The Netherlands, and will be modified by the company for the Proton launch under an ESA contract valued at 20 million euros ($24 million).
The seven-jointed ERA, which is 11 meters long, can be operated by astronauts inside or outside the space station to move objects with a mass of up to 8,000 kilograms. It is designed to maneuver gear with a precision of 5 millimeters. In addition to moving station hardware, it is able to carry astronauts quickly around the outside of the station to save time during spacewalks.
Starsys Acquisition Seen Boosting SpaceDev’s Clout
SpaceDev’s $9 million purchase of components supplier Starsys Research Corp. will result in a 180-employee company that has more clout with NASA and U.S. Department of Defense customers, SpaceDev Chief Executive Jim Benson.
“It just gives us more credibility and more presence in the market, making it easier for customers to give us business, so people aren’t asking, ‘why are you giving a $40 million contract to a 20-person company?’” Benson said in an interview.
SpaceDev, which builds small satellites and propulsion systems, will pay $1.5 million in cash and $7.5 million in common stock for Starsys. SpaceDev also will assume $4.6 million in Starsys debt, and forgive a $1.2 million loan that it provided in September when the firms signed a nonbinding letter of intent to merge. The deal is still subject to U.S. regulatory approval, which Benson said could come in November.
Starsys will become a wholly owned subsidiary of SpaceDev, and its management team will remain in place, Benson said. Starsys founder and Chief Executive Scott Tibbitts has been nominated to SpaceDev’s board of directors .
Benson said Starsys’ expertise in robotics technology will be valuable as SpaceDev pursues contracts for space weaponry. “I think many space companies are moving in that direction because that’s where the money is within the Pentagon,” he said.
Russia Loses Touch With Experimental Satellite
One of several payloads from various countries launched Oct. 27 aboard a Russian Cosmos-3M rocket did not reach its intended orbit and is not responding to commands, according to Russian press reports.
The Russian Mozhaets-5 technology demonstration satellite, built by NPO PM of Russia for a Russian military academy apparently did not properly separate from the booster, Russian news services reported.
Another one of the Cosmos payloads, the European student-designed Student Space Exploration and Technology Initiative (SSETI) Express satellite, went into safe mode due to a battery charging problem, the European Space Agency said late Oct. 27. At press time there was no further word on the condition of the satellite, which was placed into its proper orbit.
The principal payloads on the rocket, Britain’s TopSat and China’s Beijing-1 optical Earth observation spacecraft, also were put into the correct orbits.
The 125-kilogram TopSat, built by Surrey Satellite Technology Ltd. (SSTL) and Qinetiq, both of Britain, carries an optical imager capable of taking pictures with 2.5-meter ground resolution and a swath width of 17 kilometers. The Rutherford Appleton Laboratory built the imaging sensor, and the project was financed by the British National Space Centre and Britain’s Ministry of Defence.
Beijing-1, also built by small-satellite specialist SSTL, carries an imager capable of taking pictures with 4-meter resolution in black-and-white mode. In multispectral mode, the imager is designed to take pictures with 32-meter resolution and a swath width of 600 kilometers. Sira Technology Ltd. of Britain provided the imaging sensor.
Beijing-1 will be the fifth spacecraft operated as part of the SSTL-organized Disaster Monitoring Constellation. The previous four satellites in the constellation — built for Algeria, Nigeria, Turkey and Britain — were launched in 2002 and 2003.
The Cosmos-3M rocket also lofted the 20-kilogram Sinah-1 technology demonstration satellite built by Russian companies for the Iran Research Organization for Science and Technology.
Market Conditions Cited As Eutelsat Cancels IPO
Satellite-fleet operator Eutelsat has canceled its planned billion-dollar initial stock offering (IPO), saying that while institutional investors had oversubscribed to the offer, “adverse market conditions” would make post-introduction share trading among investors difficult.
Eutelsat, the world’s third-largest commercial satellite operator after SES Global and Intelsat Ltd. , had planned to start trading on the Euronext market starting Oct. 31 after offering up to 71.7 million shares valued at between 12 euros and 13.80 euros ($14.30 -$16.50 ) per share. Eutelsat planned to use the 860 million euros it expected to raise from the transaction, less banking fees, to reduce its debt.
The IPO, representing 33 percent of Eutelsat’s share capital, would have valued the company at between 2.6 billion and 3 billion euros.When Eutelsat announced its IPO plans Oct. 11, it had set its price higher, and also had expected to include separate share sales by several of its largest shareholders. The price was lowered, and the planned separate sale by Eutelsat owners was dropped Oct. 25 as the stock market continued a downward slide that started in early October.
GOES R Design Contracts Could Be Worth $30 Million
The U.S. National Oceanic and Atmospheric Administration (NOAA) awarded three contracts worth $10 million each over the next six months on Oct. 27 for design and risk-reduction work on its next generation of geostationary weather satellites.
The contracts awarded to Boeing, Lockheed Martin and Northrop Grumman include options that could bring their value to $30 million, according to a NOAA news release. The Geostationary Operational Environmental Satellite (GOES) R series satellites are slated to launch beginning in 2012.
Sally Koris, a spokeswoman for Northrop Grumman, said a single contractor is expected to be chosen to build the GOES R satellites at the conclusion of the option phase, which is slated to last 16 months.
ESA Approves Galileo Development Contract
The European Space Agency (ESA) gave final approval Oct. 28 for a billion-dollar contract with an industrial consortium that will build the ground installations and the first four satellites in Europe’s Galileo satellite navigation project, according to Giuseppe Viriglio, ESA director of European and industrial programs.
The approval came from ESA’s Industrial Policy Committee, the agency’s check-writing division through which all contracts pass. The committee met Oct. 28 at ESA headquarters in Paris.
Valued at 950 million euros ($1.13 billion), the contract already has been negotiated with Galileo Industries of Brussels, Belgium, a consortium established by Europe’s biggest space-hardware manufacturers.
Viriglio said in an interview that the actual contract with Galileo Industries will be signed in the coming weeks, but that nothing of substance remains to be negotiated. “We have agreed to a statement of work, and to the price elements,” Viriglio said. “Only some relatively minor clauses and conditions remain.”
Because of continued debate among European governments about which nation will host Galileo’s headquarters and control centers, about 90 million euros of the In-Orbit Validation contract funding has not been secured by ESA. This portion of the contract includes launching the first four Galileo satellites plus program contingency margins and part of the program overhead costs at ESA.
ESA officials expect that these remaining funds will become available in time to perform the work.
Japan’s MTSAT-1R Craft Has Lost 2 Transponders
Japan’s MTSAT-1R, a combination weather and air traffic management satellite, has lost the function of two of six transponders intended for enhanced cockpit-to-control-tower communications.
The glitch, discovered in the months immediately after launch and believed to have been triggered by an electrical discharge, will delay the Loral-built satellite’s service start date to the first quarter of 2006. MTSAT-1R was launched in February aboard a Japanese H-2A rocket. It also will leave a swath of airspace over western Japan, the Korean peninsula and part of China uncovered, according to the Japanese government.
Venus Probe Expected To Make its Launch Window
Managers of Europe’s Venus Express mission said they are confident the probe will be launched aboard a Russian Soyuz rocket before Nov. 24, after which Venus’ location relative to Earth would make the launch impossible for several months.
The scheduled Oct. 26 launch from Russia’s Baikonur Cosmodrome in Kazakhstan was scrapped when it was discovered that pieces of insulating material lining the interior of the Soyuz rocket’s Fregat upper stage had fallen onto the spacecraft.
On Oct. 24, Venus Express engineers began using tweezers and nitrogen-gas air brushes to remove the material from Venus Express, the European Space Agency announced Oct. 25. Once this task has been completed, the satellite will be subjected to on-site electrical tests before being put back onto the horizontally assembled rocket.
Russian Cabinet Approves 10-Year Civil Space Plan
Russia’s federal cabinet gave final approval Oct. 25 to a 10-year civil space plan that prioritizes satellite telecommunications, navigation and Earth observation , according to the official Web site of the Federal Space Agency (Roskosmos).
The plan calls for 305 billion rubles ($10.6 billion) to be spent on civil space projects from 2006 through 2015. These funds must be secured on an annual basis, however, and in recent years the funding actually provided has fallen short of what was approved by the government.
Other priorities outlined in the plan include development of the Angara family of rockets, new modifications of the Soyuz-2 launch vehicle and development of a new space crew capsule , such as the proposed six-seat Klipper, to replace the current three-seat Soyuz-TMA craft . The program also calls for upgrading the Baikonur Cosmodrome, which Russia leases from Kazakhstan, and Russia’s own Plesetsk Cosmodrome, according to Roskosmos.
World Series Attendees Receive Free XM Radios
Fans who attended the first game of the 2005 baseball World Series Oct. 22 in Chicago received a free radio from XM Satellite Radio along with a commemorative World Series pin.
XM Satellite Radio of Washington gave all ticket holders for the game a coupon with a unique code number so they can go online to order the Delphi XM RoadyXT satellite radio. When fans order the radio, they must prepay for three months of XM service at a $12.95 monthly fee.
XM has broadcast every regular and postseason Major League Baseball game this year.
SAIC-Led Team To Vie for NATO Missile Shield Work
Science Applications International Corp. (SAIC) is teaming with companies representing five NATO nations to build a test-bed that integrates alliance defenses against short- and medium-range ballistic missile threats.
Ending months of speculation, SAIC of San Diego officially announced Oct. 24 its plans to pursue the NATO contract under the name Team SAIC. Boeing of Chicago and Lockheed Martin of Bethesda, Md., also are competing for the integration contract, which could be valued at up to about $130 million over two years.
The winning team will develop testing facilities in the United States and Europe where NATO members can plug in data inputs from missile defense sensors and various interceptor systems . The test-bed will be used to integrate the missile defense architectures and evaluate operational concepts.
Other members of Team SAIC include France’s Thales Group, EADS Space, Germany’s Industrieanlagen- Betriebsgesellschaft mbH, Britain’s QinetiQ, and The Netherlands’ Organization for Applied Scientific Research.
NATO is scheduled to issue a request for proposals in March 2006, according to the SAIC news release.
Thales Wins Contract for Pleiades Data System
Thales Group of France will build the image reception, processing and distribution system, and the encryption/decryption equipment, for the French government’s two-satellite Pleiades program under a contract with the French space agency, CNES, Thales announced.
Under the contract, valued at 16 million euros ($19.1 million), Thales will design and install the gear that will receive, store and process around 1,000 Pleiades satellites images per day from ground facilities located at civilian and military centers in France and elsewhere. Pleiades is a dual-use system designed to provide imagery with a 70-centimeter ground resolution. Some of its imagery products will be marketed commercially.
Belgium, Italy, Spain, Switzerland and other European nations are taking minority stakes in Pleiades in return for imagery access. Italy has agreed to share radar data from its Cosmo Skymed satellites with France in return for access to Pleiades. The first Pleiades satellite is scheduled for launch in 2008.
Hurricane Wilma Causes Minor Damage at Kennedy
NASA’s Kennedy Space Center in Florida suffered minor damage when Hurricane Wilma hit Oct. 24, dropping nearly 35 centimeters of rain and pounding the facility with wind gusts as high as 150 kilometers per hour, the agency announced Oct. 25.
The space center reopened Oct. 26 and preliminary assessments showed no damage to the space shuttle fleet or other spaceflight hardware. Some of Kennedy’s buildings suffered minor roof damage or interior water damage, and the center’s Vehicle Assembly Building appeared to only lose panels on its east and west sides.
Further investigation into Wilma’s impact on the NASA center is ongoing.
Operations at Stennis Getting back to Normal
NASA’s Stennis Space Center in Mississippi got back to business Oct. 25 by test firing a space shuttle main engine for 520 seconds — the time it takes the shuttle to reach orbit. It was the first shuttle engine test at Stennis since Hurricane Katrina devastated the region in late August.
NASA announced Oct. 25 that the test was part of a certification series on the Advanced Health Management System, which monitors the engine’s performance and enables it to shut down if unusual vibrations or other anomalies are detected in the turbopump.
NASA estimates 25 percent of Stennis’ 4,500 employees lost their homes due to Katrina, with many others reporting various degrees of damage to their properties. “It’s a testament to the dedication and character of the Stennis work force that they are able to test so soon after hurricanes Katrina and Rita,” Gene Goldman, a project manager at NASA’s Marshall Space Flight Center in Huntsville, Ala., said in a prepared statement.
Sea Launch Sets Sail for Nov. 4 Inmarsat Launch
Sea Launch LLC’s Odyssey launch platform and Sea Launch Commander ship set sail from the company’s home port in Long Beach, Calif., to a site in the Pacific Ocean for the scheduled Nov. 4 launch of an Inmarsat-4 communications satellite, Sea Launch announced Oct. 26.
The satellite is the second in a series built by Europe’s EADS Astrium for London-based Inmarsat’s planned Broadband Global Area Network, which is designed to provide mobile broadband services to users with laptop sized terminals. The first Inmarsat 4 satellite was launched aboard an International Launch Services Atlas 5 rocket in March.
Sea Launch will launch the satellite aboard a Russian-Ukrainian Zenit 3SL from an equatorial site in international waters at 154 degrees west longitude. The 30-minute launch window opens at 6:22 a.m. Pacific Time, Sea Launch said.
Spot Image Wins Right to Market Kompsat-2 Data
Spot Image of Toulouse, France, will have exclusive distribution rights to data collected by South Korea’s Kompsat-2 optical Earth observation satellite — also known as Arirang-2 — outside of South Korea, the United States and the Middle East, Spot Image announced Oct. 24.
The agreement with the Korean Aerospace Research Institute will permit Spot Image to add imagery with 1-meter ground resolution to its product mix starting in 2006. Kompsat-2 is currently scheduled for launch in December aboard a Russian Rockot vehicle.
Mediator Appointed for Galileo Satellite Program
European Transport Commissioner Jacques Barrot has appointed former European Competition Commissioner Karel Van Miert as mediator for Europe’s Galileo satellite navigation project in an attempt to “facilitate” the program’s still-difficult approval process among European governments, the European Commission announced Oct. 25.
Van Miert and former European Space Agency Science Director Roger M. Bonnet were asked earlier this year to review the bidding process for Galileo’s future private-sector concessionaire. In his latest assignment, Van Miert will try to reconcile the differences inherent in a program that must satisfy political and business-profitability concerns at the same time. In recent months, several European governments have refused to pay a portion of their Galileo contributions unless the concession winner agrees to build Galileo installations on their home turf.
“Over the past few weeks, some discussions at industrial level have been delayed for various reasons, partly because of the industrial organization,” the commission said in its Oct. 25 announcement of Van Miert’s appointment. “We want to see urgent progress, because teams of experts from the industry have been brought together and …. These teams now have to get down to work.”
Galileo is a 30-satellite constellation intended to offer services similar to those provided by the U.S. GPS system. But unlike GPS, some Galileo services will be sold commercially. The private-sector consortium to be selected to manage the system is expected to run it as a profit-making enterprise.
Comments: Warren Ferster, wferster@space.com
