The National Weather Service, or NWS, recently awarded Echostar Corporation (NASDAQ:SATS) a contract to provide a satellite back-up solution for NWS’s Operational Systems Network. The Operational Systems Network provides radar, meteorological and hydrological data for Weather Forecast Offices nationwide. As Echostar Corporation (NASDAQ:SATS)’s satellite fleet grows it will be awarded more of these vital and profitable contracts — look for an Echostar Corporation (NASDAQ:SATS) Gogo “mash-up” in the future.
Loral Space & Communications Ltd. (NASDAQ:LORL) is a satellite manufacturing company that will profit from expanding airplane internet connectivity. Loral Space & Communications Ltd. (NASDAQ:LORL) has produced more satellites for broadband communications than any company and has built the highest capacity broadband satellites — delivering 100 gigabits per second throughput. There are 48 satellites based on Loral Space & Communications Ltd. (NASDAQ:LORL)’s 1300 series platform currently in service — not to mention Loral Space & Communications Ltd. (NASDAQ:LORL) stock also pays a hefty $13 dividend.
Intelsat recently selected Loral to provide a communications satellite for the Western hemisphere. This is the 50th satellite Loral Space & Communications Ltd. (NASDAQ:LORL) has built for Intelsat. Loral Space & Communications Ltd. (NASDAQ:LORL) has a forty year history building satellites — this 50th spacecraft is a major milestone not just for Loral, but for the whole satellite manufacturing industry. EchoStar and Loral will continue to get a big piece of the pie — they own and or make the satellites.
These satellite machine-to-machine services will help Iridium Communications Inc. (NASDAQ:IRDM) maximize its Iridium NEXT program. The Iridium NEXT constellation — a cluster of low-Earth orbiting inter-linked satellites is scheduled to launch in 2015. This new program will consist of satellite of 81 spacecraft (66 satellites, 6 orbiting spares and 9 earthbound back-up satellites) that will power the next generation of Iridium Communications Inc. (NASDAQ:IRDM) satellite communications.
The battle between Gogo and Iridium will drive more innovation and create much needed competition in the satellite mobile service space. Gogo needs to provide a stellar service to outpace Iridium and Row 44 while keeping Loral and EchoStar from entering in-flight connectivity services.
Cleared for takeoff
Gogo’s Internet service is available on over 80% of all North America Wi-Fi-enabled passenger airplanes. The company is growing rapidly, but it is also unprofitable — Gogo lost $95.6 million in 2012. Access to those Intelsat communications satellites doesn’t come cheap. Currently, only 6% of passengers pay for internet, but that will change. Gogo had a bumpy takeoff, but North American air travelers internet addiction and Gogo’s growing infrastructure will ensure a smooth ride for Gogo investors.
John Moore has no position in any stocks mentioned. The Motley Fool owns shares of Iridium Communications. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Why Gogo Will Succeed originally appeared on Fool.com is written by John Moore.
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