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News Breaks | | | | June 25, 2012 | | 11:53 EDT |  | GEOY | GeoEye plunges after government agency opts not to extend contract
GeoEye (GEOY), a commercial satellite imagery company, retreated after the company disclosed in a regulatory filing after the closing bell on Friday that the National Geospatial Intelligence Agency, or NGA, has decided not to exercise its full year Enhanced View Service Level Agreement option. The NGA instead proposed a three month option and a potential further nine month follow-up option, based upon the availability of funding. GeoEye stated that the total service revenue it would receive for the full contract year would be $159M, assuming the company agrees to the new proposal and that the NGA exercises both options, but warned that there can be no assurances that funding will be available to NGA to exercise both options as proposed. Also, the NGA told GeoEye it does not plan to provide additional funding under a cost share agreement for the development and launch of GeoEye-2, scheduled for launch in the first half of next year. The NGA proposed new milestones for payment of the remaining $70M it is obligated to pay GeoEye under its existing cost share agreement, three of which would occur before the launch of GeoEye-2, but no additional cost share funding. GeoEye shares were downgraded at both Benchmark and Raymond James, with Raymond Jame taking its rating all the way down to Underperform from Strong Buy. Near midday, the stock fell $5.24, or 28.57%, to $13.10. | |
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