(Editor’s Note: For this expanded edition of Orbiting Wall Street, in addition to our examination of key satellite stocks, we will be providing an expanded analysis of some of the quarterly earnings reports of companies within the satellite industry.)

PA & NSE

Outside of a couple of minor news items from Panamsat this week (a handful of new launch contracts, the delay of the Galaxy 14 launch and a transponder lease deal), it was pretty much business as usual, and the company’s stock activity reflected that. Though the stock inched downward during the 10 trading days leading up to our July 29 publication date, closing at $20.42 per share July 15 and at $20.15 July 28, it did experience some minor fluctuations in price. Barring any major news items, the next possible date for significant movement for the stock could come as soon as Aug. 9, when the company issues its second quarter financial report.

Things were even quieter with New Skies Satellites and its stock experienced similar fluctuations. The company has remained quiet since announcing a partial second quarter dividend June 20. With no news, the company’s per share price remained more or less level, closing July 15 at $21, dropping to $20.70 July 28, with closing prices as low as $20.39 (July 26) and as high as $20.94 (July 20) during that time. New Skies has not announced when it will report its second quarter earnings.

Quarterly Earnings Roundup

XMSR

XM Satellite Radio Holding Inc. lost $146.6 million in the second quarter 2005, a $20 million improvement over losses of $166.1 million in the second quarter 2004, the company reported July 28.

Revenue in the second quarter 2005was $125 million, up 136 percent in the same period a year ago. XM attributed the revenue growth to a record 647,000 net subscriber additions in the second quarter 2005, which ended June 30. This represents a 55 percent increase over the 418,000 subscribers added in the second quarter of 2004. XM’s total subscriber count stood at 4.4 million at the end of the second quarter 2005, compared to 2.1 million subscribers at the end of the second quarter 2004.

Due to the strong growth in the first half 2005, XM increased its subscriber target for the end of the year from 5.5 million to 6 million.

That subscriber growth, in part was driven by XM’s exclusive coverage of Major League Baseball.

“MLB has proven to be a huge hit with listeners,” said XM Spokesman David Butler. “The response to MLB has been overwhelmingly positive. People knew that baseball was ideally suited for radio, but few expected the reaction to be as strong and emotional has it has been. You have several types of fans — displaced fans who are not able to listen to their favorite teams on local radio, you’ve got a group of fans that live in the hometown of their favorite teams but they travel a lot. Thirdly, you’ve got major baseball junkies who love being able to listen to games for all the teams throughout the season.”

The company also announced deals with Samsung for the development of an XM-enabled MP3 player and an agreement with Napster to offer a vehicle for XM subscribers to expand their music libraries and purchase downloadable music files.

The quarterly reports generated a positive reaction from Wall Street analysts.

Bear Stearns Research Analyst Robert Peck said in a July 29 report on the overall satellite radio industry, “We continue to remain bullish on the opportunity for satellite radio. We think recent outperformance clearly points to the significant potential the industry hold.” Peck described second quarter 2005 results as “strong” and added his belief that the second half “will be strong given new product introductions with better functionality and features based on fourth-generation chipsets and possibly even radically improved wearable radios.”

Lehman Brothers Cable, Satellite & Entertainment Analyst Vijay Jayant also used the word “strong” to describe XM’s results, noting that churn was below Lehman expectations. XM reported total subscriber churn, including the effect of promotional subscribers who do not become paying customers at the end of their trial, to be 2.5 percent for the quarter, in line with the churn results from the same period one year ago and below Lehman’s 2.8 percent forecast.

Vintage Re-search Entertain-ment Analyst Alden Mahabir noted that “good financial results complement strong sub gains” in a July 29 research report.

XM’s stock seemed to reflect a positive view by investors as well. The stock closed up for the four days leading up to our deadline. It started the week at $36.36 July 25 and closed at $36.93 July 29.

Lockheed Martin Space System Sales, Operating Profit Climb

Sales in Lockheed Martin Corp.‘s Space Systems segment improved 5 percent in the company’s 2005 second quarter, as operating profit grew 13 percent, Lockheed Martin announced July 26.

The Space Systems segment recorded revenue of $1.6 billion in the most recent quarter, which ended June 30, up from revenue of $1.5 billion in the second quarter 2004. Lockheed Martin attributed the gain to increased U.S. government sales in the Strategic and Defensive Missile Systems and Satellites businesses, which offset declines in Launch Services due to fewer Atlas launches.

Segment operating profit was $146 million in the second quarter of 2005, compared to $129 million in the same period a year ago. The operating profit increase also was created by government business offsetting declines in commercial operations, the company said.

In a July 26 conference call with investors, Lockheed Martin executives said they were not expecting to see any significant shifts in its commercial space business. The executives commented that the continue to expect, on the launch vehicle side, to sell a couple of launch vehicles a year as it has done historically. On the commercial satellite side, officials noted the company is breaking even on its commercial satellite business. They noted the commercial satellite business “is not important to the corporation overall” in terms of revenues it generates.

Overall, Lockheed Martin reported a profit of $461 million, including a $27 million gain on the company’s investment in Inmarsat, on revenue of $9.3 billion in the second quarter 2005. In the second quarter of 2004, Lockheed Martin posted a profit of $296 million on revenue of $8.8 billion.

Trimble Reports Record Revenue

Trimble recorded record revenue of $204.2 million in the company’s 2005 second quarter, a 14 percent increase from revenue of $179.5 million in the same period a year ago, the company announced July 26.

The GPS-equipment manufacturer posted a profit of $23.8 million in the second quarter2005, which ended July 1, up from a profit of $20.5 million in the second quarter 2004.

The Engineering and Construction segment led the way with $141.1 million in revenue in the most recent quarter, up 20 percent from revenue of $117.2 million in the second quarter 2004. Trimble Field Solutions recorded revenue of $32.2 million, up 4 percent compared from a year ago.

Revenue in the Component Technologies segment, which is responsible for in-vehicle navigation and timing products, dropped from $18.6 million in 2004 to $14.8 million in the second quarter 2005. Revenue in the Trimble Mobile Solutions segment jumped 23 percent to $6.4 million, but the segment posted an operation loss of $1.9 million due to the write off of about $1.1 million in excess and obsolete inventory. Trimble expects the segment to reach profitability by the end of the year.

Despite the record revenues, Trimble’s stock took a tumble in the days following the announcement. On July 26, the stock closed at $43.60, down 14 cents from the previous day, and continued its drop to $37.55 July 27, before climbing back to $39.03 July 28.