Orbcomm Sees Big Growth in Revenue, Subscriber Base

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Orbcomm posted double-digit percentage increases in revenue and subscriber count for the three months ending June 30 and said the f i r s t 18 satellites of its second-generation constellation are on schedule for a launch in the first half of 2011.

Fort Lee, N.J.-based Orbcomm, which specializes in machine-to-machine communications provided by both satellite and terrestrial cellular links, also said the fifth of six satellites it launched in June 2008 has failed, as expected. Orbcomm in late 2009 received a $44.25 million insurance settlement for the failures.

The loss of the fifth satellite leaves Orbcomm with just one spacecraft carrying the Automatic Identification System (AIS) payload for maritime authorities to track ships at sea beyond the reach of current ground-based communications.

An AIS contract with the U.S. Coast Guard expired in early August.

Orbcomm, which has signed a dozen AIS partners so far, views the AIS business as a potentially major new revenue stream. It is one of several companies and governments in North America and Europe that are deploying AIS gear on small satellites. None of Orbcomm’s prospective AIS competitors has committed to a full constellation, however.

All 18 of the company’s second-generation satellites carry AIS payloads.

Orbcomm Chief Executive Marc Eisenberg, in an Aug. 9 conference call with investors, said the gradually improving world economy is helping the company to return to its previous growth rates as builders of heavy equipment ramp up production. Caterpillar Inc., Komatsu Ltd., AI — formerly GE Asset Intelligence — and Hitachi Construction Machinery together accounted for 55.6 percent of Orbcomm revenue in the three months ending June 30.

Orbcomm said its total subscriber base stood at 539,000 units as of June 30, up 11.6 percent over the same period a year ago. More than 90 percent of the net new subscriber additions were for satellite service, with the rest subscribing to Orbcomm’s terrestrial cellular offering.

For the three months ending June 30, revenue was $7.8 million, up 15.8 percent from the same period a year ago.

Eisenberg said an Earth station to be built in South Africa will fill in one of Orbcomm’s biggest global coverage gaps. He also said the company is reviewing options for launching one or more very small satellites, called Cube Sats, to protect against a possible delay in the launch of the second-generation satellites.