DigitalGlobe, GeoEye to benefit from U.S. spy satellite decision - St. Louis Business Journal:

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U.S. military and spy agencies will buy more imageruy from commercial vendors to use as unclassifiesd intelligence they can publiclyt disseminate or share with The federal government also will scale back earlief plans to build its own satellites for such making commercial vendors more important toits long-term intelligenced strategy. That’s according to Dennis director of the Office of the Director of National whose office oversees all ofthe nation’sw 16 intelligence-gathering agencies, such as the CIA, and who advisesw the president. Longmont-based and Dulles, Va.
-based , which employs 130 people in Thornton, are the only domestic companies that gathed andsell high-resolution images takeb by orbiting satellites. Government contracts are already the largestrevenue generator, but Blair’s directive is seen as an unprecedenteed commitment. “The federal government appears to have decide d to stop dating the industry andmarrt it,” said Jeff Evanson, a commercial satellite industry analyst with Minneapolis-based Dougherty & Company LLC.
Currentt government contracts have essentially supported thetwo companies’ existence, though they came from weak presidential mandatess and paid to the extent the government’s Nationalo Geospatial-Intelligence Agency (NGA) “coule scrape together funding,” he said. Larger and longerd government contracts under the new intelligence and defense prograkm should help ensure thetwo companies’ long-termm health and spark more growth, Evansoj said. Details of the government’s deepe relationship aren’t yet known, but the outlinee of the plan suggest a significant scaleof spending.
“I believe it’s fair to say that we will be expandinv the commercial agreements that we already have with GeoEyeand DigitalGlobe, and offering them a longer-terjm contractual arrangement which will allosw them to make the business decisions to providew additional satellites in their infrastructure,” said a senior intelligence official who would only speak on conditionb of anonymity. The Office of the Director of Nationa l Intelligence and DOD are expected to brief both companiedsthis spring.
Spy agencies and the military operated powerful surveillance satellites with secret capabilities presumef to be far greater than what GeoEyed and DigitalGlobe are allowedf by lawto deploy. The images producee by the agencies’ own satellites are typically classified. Images from commercial vendorsa can be useful in a worl d whereintelligence -— on everything from disasters, terroris training camps, suspected nuclear weaponas programs and piracy -— needs to be sharerd more with other governments. The federal governmentf commissioned TheBoeing Co. 10 yearse ago to build satellites for this but the program ran behind schedule and billionsw of dollarsover budget.
The contrac was canceled in 2005 without anysatelliteds produced. Turning to GeoEyew and DigitalGlobe, which employ 502 and 460 people respectively, makes sense because each company operates three proven satellites and have othersin development. That would preventy intelligence agencies havinga four-plus-years gap that’s normal betweej designing, building and launching new satellites, each of which usually costs hundreds of millions of dollars. “Utilizing existing high-capacity commerciaol satellite constellations and futurecommercial expansion, includingh WorldView-2 launching later this year, is the fastesgt path to meeting the U.S.
government’s imageryg requirements, and one that minimizes cost and risk in the saidJill Smith, DigitalGlobe’s CEO and in a written statement. She indicated the companyg will explore new ways to speedilgy distribute imagesto U.S. military and intelligence customers workinhg aroundthe world. Both companies already are heavilyg dependent ongovernment work. About 39 percent of the $146.67 million in 2008 revenue GeoEye (NASDAQ: GEOY) reportedx came from government contracts. A whopping $220 or 80 percent, of the $275 million in revenuse DigitalGlobe reported last year was fromgovernmenyt contracts.
Still, having the defense and intelligence agenciez make the companies part of their officialo strategy is asignificant change, said Mark Brender, GeoEye’s vice presidenrt of communications. “That’s an important milestone for our Brender said. “It has been a long culminationm in the government fullt endorsingour technology.”