Washington, US: Amid speculations about budget cut, GeoEye assured its investors that it fully expects to receive a USD 111 million payment from its principal US government customer by June under the terms of a contract calling for the government to share the costs of the company’s high-resolution GeoEye-2 optical earth observation satellite. The company made this announcement during a conference call with investors.
GeoEye Chief Executive Matthew O’Connell stressed the satellite’s status is in line with EnhancedView requirements, meaning GeoEye should receive the USD 111 million payment by June 30, as scheduled. “We have not been notified of any cuts to our portion [of EnhancedView],” O’Connell said during the conference call. “Nor has National Geospatial-Intelligence Agency (NGA) approached us to discuss any cuts. … While it’s likely that there will be some cuts, we can’t predict the size or timing of them.”
However, government and industry officials have said the NGA has already decided to trim USD 50 million from the EnhancedView contract for the government’s current fiscal year, which ends September 30. Cuts for fiscal year 2013 are likely to be higher, these officials said.
O’Connell acknowledged this possibility, but said the NGA is withholding judgment on any EnhancedView reductions until a review of the value to the military of commercial satellite imagery is concluded.
The review, being conducted by the offices of the US director of national intelligence and the undersecretary of defence for intelligence, is scheduled for completion by early April.
Meantime, GeoEye is attempting to rally supporters both in the military services and in the US Congress for what is likely to be a months-long battle over the fiscal year 2013 budget.
Whatever the budget outcome, he said, GeoEye will pursue to completion the GeoEye-2 satellite, which when launched will be the world’s highest-resolution commercial Earth observation satellite.
“The government specifically asked for the 34-centimeter resolution” in the EnhancedView contract, O’Connell said, adding that GeoEye’s international government customers have indicated they too want GeoEye-2 imagery.
GeoEye reported 2011 revenue of USD 356.4 million, up 8 percent from 2010, and expects 2012 revenue to increase by around 2 percent. It had USD 198 million in cash as of December 31, which when added to the USD 111 million NGA payment and operating cash flow expected in 2012 is more than enough to meet GeoEye-2 and other spending requirements, GeoEye Chief Financial Officer Joseph F. Greeves said during the conference call.
Source: Space News
