DigitalGlobe Opts To Delay New Satellite Construction

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Earth observation products provider DigitalGlobe has concluded that its current three-satellite constellation is sufficient to meet demand in the next five years and that the company will not need to start construction of a new satellite until 2012-2013, DigitalGlobe Chief Executive Jill D. Smith said.

Smith said that with the addition of WorldView-2 to the company’s fleet, DigitalGlobe has doubled its image-taking capability to 500 million square kilometers per year, which should be enough to accommodate increased business with the U.S. government and with other government and commercial customers in the near term.

“Today’s constellation is sufficient to meet the requirements of the business,” Smith said in a May 19 presentation to Longmont, Colo.-based DigitalGlobe’s shareholders. The current satellites, she said, “will provide enough capacity to double the business over the next three to five years.” Smith said that if unexpected demand were to surface, the company would be willing to accelerate its spending on new spacecraft.

DigitalGlobe reported revenue of $281.9 million in 2009, up 2 percent over 2008. For 2010, the company expects revenue to grow by at least 17 percent, to $330 million.

Smith said the U.S. National Geospatial-Intelligence Agency (NGA), whose NextView service contract accounted for about $150 million in DigitalGlobe revenue, should award a replacement contract, called EnhancedView, by this summer. “We are expecting that [EnhancedView contract] to represent a growth from the current NextView value,” Smith said.

The company has signed image-delivery contracts with four international Direct Access Program (DAP) partners, who pay DigitalGlobe a set fee in return for a certain amount of access to the company’s satellites in each partner’s geographic region.

These four partners will account for $35 million per year in revenue to DigitalGlobe once they are operating at full speed. The company is seeking similar agreements with up to three additional partners and forecasts that five to seven DAP agreements could generate total revenue of about $50 million per year.