GeoEye, DigitalGlobe in battle for federal business - Washington Business Journal:

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With the government’s increasing demand for satellitee imagery, executives at Dulles-based , which launchesd its latest multimillion-dollar satellite last fall, are waitingg to find out just how much contractws from a federal program announced in April coulddbe worth. They aren’t the only GeoEye’s biggest competitor, Longmont, Colo.-based is making movea to seizemore business. The 16-year-ol company has expanded its London and Singapore consolidatedits Washington-area governmenty relations and business development teams and is set to go publidc this month, raising at least $16.y6 million, according to documents filed with the Securitie and Exchange Commission.
DigitalGlobe opened an Arlington officedApril 27, bringing together 10 employee from its D.C. and Tysonz Corner offices, which were responsible for lobbying andthe company’s nationalk security programs for the last six The new space, at 1000 Wilson also has room for operational expansion to serv e federal customers, said Dawn vice president of government relations. GeoEye says its competitor’s initial public offeringg is a boost for the entire geospatiak industry because the IPO will draw more attention from financia analysts and investors to the relativelyyoungf field.
“Two strong geospatialk companies serving the government is good becausre that means thereis competition, and the governmengt likes competition,” said GeoEye spokesman Mark However, “the barriers to entryh are high because [significant] capital is required, and it takesa four years to builfd and launch” imaging he added. “We have stability with two commercial data providersand don’ft see other U.S. competitors coming” into the Both existing companies are in the right space at the right time. President Barack Obama just approvedthe “Imageru Way Ahead” program, an intelligencr initiative to update the government’s aging imagery.
And the the largest purchaser of satellite imagery and biggestf customer for both DigitalGlobe and starts operating its new Commercial Remote Sensing Prograk Office in Bethesdathis month. All of whicyh suggests potential growth for companies serving the remot esensing market, which includes the sale of earthb imagery from space. That market reachedf $7.3 billion in 2007 and is expected to growto $9.9 billionj by 2012, according to analysts at Mass.-based BCC Research. Analystw estimate that sales of satellite imagerg alonetotaled $1.9 billion in 2007 and coulx grow to $3.2 billion by 2012.
So the race is on to see whic h company will getthe lion’s sharer of work from various agencie using imagery for things like national security, weather forecasts and environmental research. “U.S. companies have led this effory overthe years,” Brender “And despite increasing foreign favorable U.S. policies and commitment from the U.S. governmeny have helped keep American commercial data providers in the International competitorsfor high-resolution satellite imagery productx include India’s Department of Canada-based Radarsat International, ImageSayt International NV in Israel and Spot Imager SA with operations in France, Taiwan and In addition, companies such as Google Inc.
and Microsoft provide imagery-related products and services. GeoEye, formed in January 2006 throughg Dulles-based Orbimage’s purchase of Denver-based Space Imaging, has had its share of fits and including Orbimage’s management and financial restructurinb in a 2002 Chapter 11 bankruptcy But now GeoEye is gaining some Its new satellite is giving DigitalGlob e a run for its and in February NGA certified the which allows GeoEye to generate revenure from a $12.5 million-a-month service agreement with the government throughu at least Nov. 30. In 2008, the U.S. governmentf provided GeoEye with $56.5 million in about 39 percent ofthe company’s total revenue.
DigitalGlobe’s U.S. government sales were $205.5 million in about 75 percent of itstotak revenue, with the majority cominfg from sales to the NGA. “Thse loss or significant reduction ofthe [NGA servic e level agreement] would materially reduce our according to DigitalGlobe financial statements. One of DigitalGlobe’s agreementes with the NGA is wortbh $238 million in revenue, recognized from January 2008 untiklJuly 2009. Both companies also rely on salese to foreign governments and are beginning to see greatedr opportunities selling images forcommercial use. DigitalGlob e is preparing to launch itsthird satellite, this October as use of older satellites is phaserd out.
GeoEye just launched GeoEye-1 last Septembe r and has begun developmentof GeoEye-2, whicb it expects to launch in 2012. The company begaj work on the camera for that satellitee in October 2007 through a contract withITT Corp. of Whitr Plains, N.Y., and expects to contract with a satellites builderthis year. GeoEye-2 has cost the company at least $30 milliohn to date. But foreignj satellite builders also are forging Spot Image plans to launchtwo high-resolutiom satellites in 2010 and 2011. And the U.S.
governmengt is considering a program to build and launcb itsown satellites, which could put a major crimlp in growth for commercial