Integral Systems built its business and reputation providing satellite control software for commercial operators. But after becoming the dominant provider in that market, Integral has to move to new areas to continue its growth.
Today, Integral Systems garners most of its revenue from government customers, a transformation sparked by its 2002 win of the U.S. Air Force’s Command and Control System-Consolidated (CCS-C) contract. The multi-million dollar effort will bring control of many the service’s satellites — including the Defense Satellite Communication System (DSCS), Milstar, Advanced Extremely High Frequency (AEHF) and WGS spacecraft — under a single system.
“The original scope was for the DSCS and Milstar birds and Advanced EHF and Wideband Gapfiller were options,” says Pete Gaffney, Integral’s CEO. “I think our system has proven itself to operate just about any satellite type and they really ought to consider it for the standard for all of the space programs.”
Gaffney who has been with Integral since 1986, was named CEO of the company in May 2006. While Integral’s business was strong, he inherited the reins of a company in some disarray following the resignation of former CEO Steve Chamberlain due to felony charges, and Integral also was receiving pressure from shareholders who felt the company was undervalued.
“We have added five new directors, and our shareholders were pushing for more independent, outside directors,” Gaffney says. “The directors we had at the time had been directors for a long period of time, well over 10 years. Three of those new directors were suggested by shareholders, while two were other outside directors. Right now, we have nine directors, seven outside and two inside. So we’re really trying to be responsive to our shareholders.
“They believed the stock price of the company was depressed due to the issues around Steve Chamberlain and those raised by a former director, Bonnie Wachtel, and believed adding more outside directors would improve our corporate governance. They also believed the company was undervalued due to those issues and they wanted to capitalize on the real value of the company by exploring strategic alternatives,” including the potential sale.
In February, Integral reported revenues of $27.4 million and profits of $2.1 million for its fiscal 2007 first quarter. Those numbers were down slightly from a year ago, but Gaffney attributed the decline to Integral’s work to ongoing bids and proposals for new business that would push Integral to even higher levels.
Gaffney spoke with Via Satellite Editor Jason Bates about Integral’s transformation and the company’s next steps.