With Wall Street just blocks away, it is only appropriate that the current economic crisis would be a dominating subject at the ISIS Satellite Investment Symposium and the Satcon 2008 Convention, both in the heart of the financial world, New York City.
In my first Satellite Today Blog review of these events, I’m going to run down the list of questions and issues that were raised and determined whether these were addressed, answered or ignored. Feel free to comment on whether you agree or disagree and pitch your own questions as well.
Issue 1 – How will our economic climate affect the satellite industry?
Verdict: Addressed and answered. This should have been the title of every forum and panel that was held at this event (with the exception of military and satellite partnerships). You couldn’t escape the issue. Thank you to Sanford Bernstein Analyst Craig Moffett for getting the ball rolling on the issue by interrupting an MSS panel of executives talking about the positive future of their services by saying – “Any business plan you had four weeks ago, throw it out the window.”
Despite the grim situation, the good news, from what I can tell, is that satellite executives have acknowledged the situation and are making adjustments. What those adjustments are will depend on the figures and statistics they see down the road. For more details, read and subscribe to Satellite News.
Issue 2 – Are commercial satellite companies making adjustments to their expectations of consumers who are experiencing financial difficulties?
Verdict: Ignored (by subscriber-based services). This issue drove me crazy. Whenever I heard an executive from a subscriber-based service say “based on our customer projections, we see an increase…” I wondered just how old these projections were. If they were measured in, say, April, wouldn’t these be invalid in today’s market? I’ve written a lot of articles about satellite, terrestrial hybrid cellular services and I have heard a lot of talk about the potential to download video to handsets and increasing bandwidth. In the back of my mind, I’m asking myself ‘Will people go out and spend the money on these new handsets, or will people save money to pay their mortgages?’
Take it from a journalist who think a cup of noodles is a luxury meal – this issue that needs to be considered when making ‘future projections.’ Typically, the first thing to be nixed from a tight household budget is typically consumer electronics that aren’t needed.
Issue 3 – Is there investment capital out there?
Verdict: Addressed and answered. No. The financial analyst panels at ISIS made this clear. Again, for more details, subscribe to Satellite News.
Issue 4 – Who will survive and who will fail?
Verdict: Addressed but not answered. Certain names were dropped, more specifically, companies that have not secured their funding. However, there are several factors out there that could save these companies and good management is one of them. Luckily, most of these companies have good management.
The bottom line is: cash is king, and luckily, there are a lot of companies out there with cash on hand. We will not know who will sink or swim. Some think ground segment will be the first hit, some don’t. Some think that the ATC sector is alive and well, some say ‘not so fast.’ Only time will tell.
Issue 5 – Will there still be a high demand for bandwidth?
Verdict: Addressed, promoted, praised and answered. For the satellite industry, demand for bandwidth and broadband data and video services is the driving force of the industry. The military is now a big customer. Consumers who cannot afford to go out to the movies are downloading movies on their computer… The need is out there and satellite companies have done extremely well in using these convention forums to push satellite services as a utility – like electric, heat and hot water. As I said before, whether or not customers will buy new hardware is another story.
Overall, I’m optimistic about the satellite industry’s position in the economic crisis. It certainly did not contribute to the problem and in some cases, it may even be a solution to the problem.