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Wednesday, May 13, 2009

Seat Belts Required















Well, the stock market and economic news has certainly kept things interesting lately.

As you may know, I publish a monthly watch list of stocks. What you may not know is that I tend to keep all my lists, even the ones from before I started this blog.

On one of these such lists, is a company called Geoeye. They are a satellite imaging company who just published a somewhat decent quarterly report. What I found most interesting was not the report so much but the market reaction.

It dropped over 20%!

What caused this reaction?

Well, they did say that one of the profile(s) for collecting imagery was not working and that this only affected color resolution for that profile and not accuracy nor their ability to meet government SLA's on orders.

That would be a good reason...

But it does not seem to be affecting revenue, nor their ability to meet future revenue demands...

So, what exactly are Profile(s)? I am not completely sure.

Maybe profiles are customers... In this case it does not appear to be a customer who supplies a major source of revenue...

Maybe it is a (mode) of taking certain type of pictures or one of a couple different parallel or redundant systems...

But to drop over 20% without knowing the full extent of the problem?

Maybe...

OK, so that was the potential bad news.

What is the good news?

Well, a comment was made during the press conference that very little revenue from their newly approved government contract was included in the report.

And that they had not operated the satellite at full capacity for much of the quarter due to start up operations and testing. All the while still being able to meet government SLA's!

Approval was given in February which means really, at most, a months worth of imagery and orders would have been done.

Here is the excerpt from one of the many news blurbs regarding Geoeye quarterly report.

GeoEye reports Q109 results Reports Q1 (Mar) loss of $0.09 per share, $0.16 better than the ($0.25) First Call consensus; revenues increased 25.9% year/year to $45.21 mln vs $41.92 mln consensus.

So, what accounted for the good increase in revenue?

Hmmmm, the big ol' GOOGLE logo on the side of their last rocket launch might be a clue.

And they have had some significant industry traffic over the past several months, ranging from PC Games to GPS to Geographical Research.

Also, they have started to realize income from deferred payments from the government (they helped finance the launch and building of the satellite).

Add to this that Geoeye is hiring people, expanding production facilities all in anticipation of added work; and I really do not see a reason for the 20% drop.

All good news... Meeting SLA's, Increasing Revenue, and not at full capacity yet...

So, ready for a wrench to be thrown into the mix!

A major competitor, DigitalGlobe, is due to go public Thursday. But everyone has known about this for months and they have been competing for years anyway.

OK, so yes Geoeye did fall because of the news about a problem with the satellite.

But the bottom line... Revenue is still really good!

So, guess what...

I sold my holdings of Marvel Comics (they went up about 4% in one week) and bought some stock in Geoeye.

So far... GEOY +5.5% increase vs MVL -4% drop.

Oh, and the DigitalGlobe IPO set for tomorrow....
I just might roll the dice with the remainder of my MVL sale and see what happens...








Maybe...

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