SpaceDev's Turbulent Flight (SPDV)
Anyone who, like me, has been holding shares of SpaceDev (SPDV.OB) over the past several months has probably gotten a little case of motion sickness -- the charts have shown a number of the stomach-numbing drops that make Space Mountain such a thrill ride for the adolescent set.
I bought shares last Spring and again in the Fall when they announced the Starsys acquisition, and just as when I looked at SPDV in my annual checkup in January I am now holding a position with an average cost of about $1.70 -- it's been ugly with the price recently hitting below $1.15, and I probably would have been better off just ignoring the price movements since January (though I have been tempted to buy more on a few of these dips).
And this hasn't just been the erratic movement of a manipulated bulletin board stock -- the business, the share count, and the management have all changed significantly in the last few months as the acquisition of Starsys was finalized and Jim Benson, SpaceDev's founder, stepped up to the Chairman (and Chief Technology Officer ... a la Bill Gates) position to make room for a new CEO ...
... and not only that, but the AMEX has changed it's listing rules, so the likelihood of SpaceDev (delisted from NASDAQ a long time ago) making it's way up to a major exchange is probably now pushed a bit further into the future (I had guessed that relisting would happen relatively soon this year given the doubling of market cap with the Starsys acquisition, but management downplayed that on their recent conference call).
I read the earnings release and listened to that conference call, though, and I'm convinced that all of these changes were for the better.
SpaceDev had to shell out a fair amount to buy the bigger Starsys, but will now have much stronger cash flow from Starsys' larger sales base and broader product offerings, and enough working capital from the secondary offerings to put them on fine footing to build the business. I'm guessing that some of the recent selling may be the Starsys' smaller shareholders cashing out, or SPDV shareholders who don't like the acquisition heading for the exits ... that's fine, I think in the long run the new, larger company will have a greater chance of success.
And while Benson has been a visionary in the space business (and before that, a very successful entrepreneur in the computer business, from whence came many of SpaceDev's strategies), it's often wise to have a seasoned outsider come in as CEO when you're trying to take your company to the next level -- and this merger makes now a pretty good time for that to happen, in my opinion.
SpaceDev still seems to me to be on the cusp of some truly dramatic greatness ... but it's also possible that they'll fail to reach the heights that optimists are seeing, they've certainly had such failures in the past.
They intimated in the conference call that they expect the final work on the Missile Defense Agency satellite array work to be authorized and underway soon -- and this is the final design, fabrication and test stage, by far the most lucrative part of what is by leaps and bounds their largest contract.
And they're also continuing to pile up more work, both in the Starsys line and in SpaceDev's traditional microsatellite and propulsion businesses -- they just got a $1.25 million contract for the ANGELS nanosatellite program from the Air Force, and they are now offering bargain priced commercial launches of their microsatellites in conjunction with SpaceX (assuming that those SpaceX rockets end up working, they've had a lot of launch delays in the last few months)
But the big news that everyone is looking for, beyond the gradual growth of SpaceDev and Starsys' business lines and the piling up of more contracts for commercial and government work, is news of NASA's plans for a service vehicle for the International Space Station to take the load off of the shuttle. SpaceDev has a proposal for that mission called the Dream Chaser, based on an earlier NASA design (this follows a trend at SPDV that I really like -- they don't reinvent the wheel) ... but almost all the other significant actors in this realm are aiming to get this contract, too. With the focus on cost effectiveness and fast design and execution I'd like to think SpaceDev has a chance to get some of this business, but I'm certainly no expert in federal procurement or in space engineering ... thankfully, with the Starsys acquisition SpaceDev has doubled the number of experts they have on hand. Hopefully that will help.
And as I've said before, even if they fail to get the occasional rock star contract that gains all the attention, SpaceDev has proven over the past year that they can build a profitable business based on a large variety of smaller contracts, something they'll have the chance to really excel at with their new micro and nanosatellite products and services and the great reputation of Starsys products (Starsys built a lot of the components of the Mars rovers that are still performing many years after their expected useful lifespan).
SpaceDev had a great recovery in the stock price today after folks had a chance to listen to the conference call and absorb the fact that SPDV just completed it's first full calendar year of profitability -- they're on the right track and I just might fall to temptation and take another bite for my portfolio, but for now I'm just watching. It should be a very interesting year for SPDV.
I bought shares last Spring and again in the Fall when they announced the Starsys acquisition, and just as when I looked at SPDV in my annual checkup in January I am now holding a position with an average cost of about $1.70 -- it's been ugly with the price recently hitting below $1.15, and I probably would have been better off just ignoring the price movements since January (though I have been tempted to buy more on a few of these dips).
And this hasn't just been the erratic movement of a manipulated bulletin board stock -- the business, the share count, and the management have all changed significantly in the last few months as the acquisition of Starsys was finalized and Jim Benson, SpaceDev's founder, stepped up to the Chairman (and Chief Technology Officer ... a la Bill Gates) position to make room for a new CEO ...
... and not only that, but the AMEX has changed it's listing rules, so the likelihood of SpaceDev (delisted from NASDAQ a long time ago) making it's way up to a major exchange is probably now pushed a bit further into the future (I had guessed that relisting would happen relatively soon this year given the doubling of market cap with the Starsys acquisition, but management downplayed that on their recent conference call).
I read the earnings release and listened to that conference call, though, and I'm convinced that all of these changes were for the better.
SpaceDev had to shell out a fair amount to buy the bigger Starsys, but will now have much stronger cash flow from Starsys' larger sales base and broader product offerings, and enough working capital from the secondary offerings to put them on fine footing to build the business. I'm guessing that some of the recent selling may be the Starsys' smaller shareholders cashing out, or SPDV shareholders who don't like the acquisition heading for the exits ... that's fine, I think in the long run the new, larger company will have a greater chance of success.
And while Benson has been a visionary in the space business (and before that, a very successful entrepreneur in the computer business, from whence came many of SpaceDev's strategies), it's often wise to have a seasoned outsider come in as CEO when you're trying to take your company to the next level -- and this merger makes now a pretty good time for that to happen, in my opinion.
SpaceDev still seems to me to be on the cusp of some truly dramatic greatness ... but it's also possible that they'll fail to reach the heights that optimists are seeing, they've certainly had such failures in the past.
They intimated in the conference call that they expect the final work on the Missile Defense Agency satellite array work to be authorized and underway soon -- and this is the final design, fabrication and test stage, by far the most lucrative part of what is by leaps and bounds their largest contract.
And they're also continuing to pile up more work, both in the Starsys line and in SpaceDev's traditional microsatellite and propulsion businesses -- they just got a $1.25 million contract for the ANGELS nanosatellite program from the Air Force, and they are now offering bargain priced commercial launches of their microsatellites in conjunction with SpaceX (assuming that those SpaceX rockets end up working, they've had a lot of launch delays in the last few months)
But the big news that everyone is looking for, beyond the gradual growth of SpaceDev and Starsys' business lines and the piling up of more contracts for commercial and government work, is news of NASA's plans for a service vehicle for the International Space Station to take the load off of the shuttle. SpaceDev has a proposal for that mission called the Dream Chaser, based on an earlier NASA design (this follows a trend at SPDV that I really like -- they don't reinvent the wheel) ... but almost all the other significant actors in this realm are aiming to get this contract, too. With the focus on cost effectiveness and fast design and execution I'd like to think SpaceDev has a chance to get some of this business, but I'm certainly no expert in federal procurement or in space engineering ... thankfully, with the Starsys acquisition SpaceDev has doubled the number of experts they have on hand. Hopefully that will help.
And as I've said before, even if they fail to get the occasional rock star contract that gains all the attention, SpaceDev has proven over the past year that they can build a profitable business based on a large variety of smaller contracts, something they'll have the chance to really excel at with their new micro and nanosatellite products and services and the great reputation of Starsys products (Starsys built a lot of the components of the Mars rovers that are still performing many years after their expected useful lifespan).
SpaceDev had a great recovery in the stock price today after folks had a chance to listen to the conference call and absorb the fact that SPDV just completed it's first full calendar year of profitability -- they're on the right track and I just might fall to temptation and take another bite for my portfolio, but for now I'm just watching. It should be a very interesting year for SPDV.
Labels: SPDV
This article posted by One Guy @ 3/29/2006 06:11:00 PM 0 comments
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