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STRATEGY

Rising, Falling, Rising Star

A satellite maker and the CEO of Orbital ponder the pros and cons of federal contracts.
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Veterans

In the satellite industry, politics have the power to send your fondest hopes straight into a black hole. W. David Thompson knows that firsthand.

As a research-and-development officer in the air force, Thompson had bought spacecraft and launch vehicles for 10 years. Each "bus" -- the satellite vehicle that scientists fill with instruments -- cost about $300 million. "I thought we weren't getting a very good price," Thompson says. "The bottom of the market was left standing open." To fill the void, he launched Spectrum Astro (#437), a Gilbert, Ariz., manufacturer of space satellites, in 1988. Flush with national-missile-defense dollars, Spectrum rocketed all the way to #19 on the 1994 Inc 500.

But Spectrum's fortunes were vulnerable to the changing of the guard in Washington. Following Bill Clinton's defense-spending cuts, Spectrum's revenues fell from $17 million to $7.5 million in two years. Through the 1990s Thompson subsisted on smaller government projects for satellites used in research and navigation. He assiduously avoided commercial-satellite systems, such as the now-defunct satellite mobile-phone company Iridium. "You have to focus on customers that have the money," he says -- the military and the government. Even after Clinton's cuts, the fed's annual satellite tab was $7 billion.

This year Spectrum's star is once again on the rise, thanks to a design contract -- that could climb as high as $275 million -- for President Bush's planned missile shield. If Spectrum prevails, Thompson will take home a 10-year contract worth billions. Much is at stake, but Thompson's been there before. "I can't get too excited," he says. "If you sprint, you'll fall over."


Trajectory

Company Revenues Five-year growth Number of employees
Spectrum Astro (#437) $120 million 673% 314
Orbital Sciences (#2 in 1988) $25 million 25,297% 44
Orbital Sciences (2000) $726 million 57% 4,200

Hello, Dave?
This Is Dave

Spectrum's W. David Thompson knows his competition by name: David W. Thompson. The latter (no relation) is founder and CEO of Orbital Sciences, a Dulles, Va., satellite company that blasted to #2 on the Inc 500 in 1988.

In addition to sharing a name and an industry, the CEOs share some of the same clients, like NASA and the Pentagon. But unlike Spectrum, Orbital has vigorously developed systems for private-sector uses like satellite TV and public transit. "In 1991 we probably did 85% to 90% of our business with the government. But over the last five years, the space industry has been propelled by commercial demand. Today we do about half our business with commercial satellite operators around the world," David W. Thompson says.

Commercial markets are often chaotic. "In the mid to late '80s there was a lot of new investment in satellite networks and some so far have not worked out very well," Orbital's CEO concedes. Recently he hired a vice-president for defense projects. It's an about-face for a CEO who swore that commercial satellites would be the wave of the future. But perhaps having both public-sector and private-sector contracts will mitigate the ups and downs that have hurt Orbital and Spectrum alike.


View the 2001 Inc 500 list .


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Last updated: Nov 15, 2001




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