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C-Com Taps Partners For Profit

By | October 25, 2004

      Ottawa, Canada-based C-Com Satellite Systems Inc. [CMI] found in its eighth year of operation that deploying an innovative and cost-effective technology in the slowly growing satellite broadband market niche ultimately can lead to a profit.

      The company develops and manufactures mobile satellite technology but, until this year, its search for consistent profitability went unfulfilled. C-Com began as a startup operation with no revenue in 1997, and it stayed with its plan of offering high-speed Internet over satellite until cobbling together enough customers in the emerging satellite broadband arena to prove this year that persistence pays off.

      Founded by President and CEO Leslie Klein and two other engineers in 1997, C-Com turned in a profitable second quarter for its fiscal year that ends Nov. 30. It then followed up with a profitable third quarter. The company is on pace to finish with a full-year profit for the first time in the company’s modest history, Klein told Satellite News.

      Satellite broadband service providers generally have been unprofitable. However, C-Com is finding that providing technology for them is a viable and promising business. As the satellite broadband market grows, so should C-Com’s revenues and profits.

      The company’s unique selling proposition is that its technology provides reliable, high-speed broadband connectivity to vehicles for a lower price than other options on the market, Klein told us. C-Com has adapted its equipment to work with five different satellite broadband service providers, and it plans to add additional companies to its list of broadband clients in the coming months.

      The technology previously was not available at its current price range, Klein said. Satellite news-gathering (SNG) trucks cost between $119,200 to $158,900 each, whereas C- Com’s equipment is priced at less than $7,947. The lowest-priced C-Com self-pointing antenna costs less than $6,000, and it includes a satellite modem antenna and transmitter.

      Heightened demand has allowed C-Com to justify increased production that now positions it to reduce its costs per unit and reap the benefits of economies of scale output. When increasingly coupled with video and voice over IP (VoIP) services, the C-Com equipment sales will rise significantly, Klein said.

      The Upgrades

      Early this month, C-Com announced that it had adapted its product to meet the needs of Herndon, Va.-based iDirect Technologies, a designer and developer of satellite-based market access services. The two companies will combine C-Com’s iNetVu Mobile Platform with iDirect’s NetModem II products.

      C-Com’s proprietary iNetVu Mobile satellite platform will be used to deliver Internet access, video and VoIP into stationary vehicles at speeds of up to 18 Mbps on the download and 4.2 Mbps upstream anywhere in the world where satellites are accessible. The role of iDirect is to design, develop, and market fast and reliable bi-directional satellite-based broadband access solutions using Internet protocols.

      That deal lets C-Com’s iNetVu Mobile self-pointing antenna help users automatically locate their satellites of choice from a vehicle or moveable structure anywhere in the world in fewer than three minutes by the click of a mouse that connects to the Internet at broadband speeds, Klein said.

      Warren Brown, vice president of marketing at iDirect, said, “We found that the capabilities and ease of use of C-Com’s self-pointing antenna, coupled with iDirect satellite router platform made a very robust, easy to use and highly desirable offering for the mobile communications market. We are excited to see the natural expansion into this market that the joining of these products brings and expect to see greater and greater demand in the marketplace for this offering.”

      The Partners

      Last week, C-Com teamed with fellow Ottawa company RAMTelecom to start delivering high-speed, satellite-based mobile Internet services using the LinkStar equipment of Carlsbad, Calif.-based Viasat [VSAT]. RAMTelecom’s Network Operation Center in Ottawa will provide broadband services for C-Com’s iNetVu Mobile platform. A large number of C-Com units will be deployed using Viasat’s LinkStar equipment and RAMTelecom’s service, Klein predicted.

      Andrea Maleter, technical director at satellite marketplace-forecasting firm Futron Corp. in Bethesda, Md., said the mobile market is an increasingly important one for the satellite industry.

      “At a time when users want Internet access everywhere, including while on the move, new technologies such as those of C-Com are making it possible for a wider range of satellite systems — including traditionally fixed satellite systems — to meet this demand,” Maleter said.

      The iNetVu Mobile has been deployed with modems from Germantown, Md.-based Hughes Network Systems’ (HNS) DirecWay; Israel-based Gilat; McLean, Va.-based StarBand; and Viasat. The C-Com technology is continually upgraded to improve its performance, Klein said.

      To that end, C-Com pounced on the opportunity to go from offering one-way satellite broadband services to two-way capabilities when HNS rolled out its DirecWay service.

      “In 1997, this type of satellite technology did not exist,” Klein said. “This could not have been done until satellite broadband services emerged to reduce the cost of two-way, high-speed Internet access.”

      Reseller Opportunities

      “We have customers from Australia to Iraq,” Klein said. “Many of our customers are large satellite operators that buy the product from us and resell it to their own customers.”

      Ericsson, Telstra, Telesat Canada, Satmex, InfoSat and Satlynx have deployed C-Com’s iNetVu Mobile technology. C-Com’s satellite-based products and services are serving clients throughout Canada, the United States, the Caribbean, Europe, Australia, Mexico, Latin America and the Middle East. The ultimate users of C-Com’s capabilities include government agencies, film production companies, oil and gas exploration ventures and rural firefighting teams worldwide.

      The two-way, high-speed broadband service also has been installed in recreational vehicles (RVs) and motor coaches, Klein said. Canada’s Progressive-Conservative Party used the high-speed Internet access on seven buses it took across the country during the nation’s last national political campaign. Each bus was equipped with its own C-Com unit.

      CTV and Global Television, two of Canada’s three television networks, also use the units on mobile vehicles of their own along with dozens of fire and police stations. IBM [IBM] used the capability to provide Internet access to a mobile van that traveled to roughly 400 college campuses throughout North America to promote its new “ThinkPad technology, Klein said. IBM was able to set up live demonstrations of its product virtually anywhere.

      Another unique application has been rolled out in Australia, where Telstra provides real-time Internet coverage of car races. A $500,000 mobile rig travels from race to race, and it can provide Internet access to 20 journalists at one time, wherever the trailer stops, Klein told us, adding Australians also can track the race online.

      The technology proved its usefulness when other forms of communications were knocked out during the recent hurricanes that ripped through Florida. Akron, Ohio-based VSAT Systems developed a mobile satellite platform called the Emergency Mobile Communications System (EMCS) that used the iNetVu self-pointing antenna and the iDirect satellite router in the wake of the recent hurricanes.

      The Financials

      C-Com is on track to amass revenues of more than $3.97 million during fiscal year 2005 that ends Nov. 30. That level of revenues would mark a jump of 25 percent from fiscal year 2004 revenues of just more than $3.18 million, Klein said. FY04 revenues climbed 42 percent from the previous fiscal year.

      The increased sales are a direct result of widened acceptance and increased demand for C-Com’s iNetVu Mobile platforms, which the marketplace is showing are becoming a favorite of satellite operators and resellers worldwide, Klein said. The technology will continue to be adapted to work with a number of new satellite service providers and to deliver increased bandwidth, he added.

      The company turned in a profit $23,846 during the second quarter of FY04 but it was unable to put consecutive profitable quarters together until this fiscal year, Klein said. FY04 showed undeniable progress; the company only lost $67,562, compared with a loss of $966,537 for the prior fiscal year.

      C-Com has 30 million shares outstanding since its 2000 initial public offering (IPO) when the stock was sold for $.79, a share. Insiders hold roughly 60 percent of the shares, and they tend not to sell. On many occasions, the stock has not traded at all on the Toronto Stock Exchange.

      At press time, C-Com shares were trading at around $.41, in a transaction last Tuesday. C-Com’s stock rose and slid along with many public companies focused on telecommunications during the past few years. The stock peaked at $3.50 before its price “melted down” after the Internet bubble burst, Klein said.

      “The biggest problem we have is that we are not visible on anybody’s radar,” Klein said. The company’s spends its money on research and development rather than on promoting the stock, and its shares are too thinly traded for any investment analysts to cover it.

      With virtually no debt, C-Com has cash in reserve. It is a rare company that is not looking for additional financing, Klein said.

      (Leslie Klein, C-Com Satellite Systems, 613/745-4110, ext. 4950; Warren Brown, iDirect, 703/ 648-8155; Andrea Maleter, Futron Corp., 301/347-3431)

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