C-COM Satellite Systems Inc.
April 29, 2013 Issue
The Most Powerful Name In Corporate News and Information
With their iNetVu® Mobile Antennas now the defacto Standard for many Companies using Mobile Satellite Antenna Systems Worldwide, C-COM Satellite Systems Inc. continues to Maintain Profitability and Dramatic Growth
About C-COM Satellite Systems Inc.
C-COM Satellite Systems Inc. is a leader in the development and deployment of commercial grade mobile satellite-based technology for the delivery of two-way high-speed Internet, VoIP and Video services into vehicles. Founded in 1997, C-COM has developed a unique proprietary auto-deploying (iNetVu®) antenna that allows the delivery of high-speed satellite based Internet services into vehicles while stationary virtually anywhere where one can drive. The iNetVu® mobile antennas have also been adapted to be airline checkable and easily transportable. The company's satellite-based products and services deliver high-quality, cost-effective and reliable solutions for mobile applications throughout the world. More information is available at: www.c-comsat.com
iNetVu® is a registered trademark of C-COM Satellite Systems Inc.
C-COM Satellite Systems Inc.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – April 29, 2013
CEOCFO: Mr. Klein, would you tell us what is happening today with C-COM Satellite Systems?
Mr. Klein: Since we spoke, many positive things have happened. The company continues to maintain its profitability and the share price of the company has more than tripled since we have last spoken. It has been a very good number of years for the company, to the point where we are issuing dividends to the shareholders. We declared a 4 cent a year dividend recently payable quarterly. The company generates more than sufficient cash for its operations and we are able to return the excess to the shareholders. We have grown our business dramatically since we have spoken a couple of years ago. In 2011 the company has broken all records for sales. Due to the Tsunami in Japan where we assisted the 3d largest cellular company, Softbank with satellite antennas that replaced the thousands of destroyed cell towers, our sales passed $19 million and we generated in excess of $5 million in after tax profits. Last year, we ended the year with about $13.5 million in sales and net profits of close to $3 million. Our mobile satellite antenna products have become the defacto standard for many companies using mobile satellite antenna systems around the world. Since last time we spoke about 3 years ago, we have grown the business, the profitability and have developed a significantly larger customer base. We have also introduced the product in many other countries around the world. In general, we are doing very well as a corporation.
CEOCFO: Would explain what C-COM Satellite Systems is about?
Mr. Klein: The company manufactures a proprietary satellite antenna technology that is used to deliver high speed Internet, video and voice into vehicles wherever high speed connectivity is required. These antennas sit on top of vehicles or can be transported in cases. In some instances, they are even small enough to take on the plane as check-in luggage. They deliver the same type of services that you would have in downtown Manhattan in your office except that most of our users are in remote areas—from Siberia, South Africa, to the jungles of South America and the deserts of Australia. We enable people to get Internet connectivity the same way you would get it in your office. In many instances, these customers get tremendously more bandwidth than you would get in your office because it is coming from the satellite and it is possible to deliver 10-20 times more bandwidth than you would get at home.
CEOCFO: What is the key to C-COM Satellite Systems’ success?
Mr. Klein: They key to our success is the technology we have, which is one of the most advanced in the world. We have a good lead on our competitors with this technology. The product has also been designed to be extremely reliable and cost-effective. We have a very good team of people who are able to provide excellent technical support to those who need it around the world. The combination of all these factors makes it relatively easy to sell the product and it literally flies off the shelves and is being sold in large quantities around the world.
CEOCFO: How do people find out about C-COM Satellite Systems?
Mr. Klein: The company is publicly traded. On the Toronto stock exchange, our trading symbol is TSX CMI. As a publicly traded company, we issue press releases, we publish our financial results and of course we attend many trade shows around the world. We present papers at some of these trade shows and offer training courses to our customers. We also advertise in almost all trade publications relating to satellite communications and broadband. This is how people find out about us. We also have a very strong Internet and social networking presence. The combination of that plus seeing our products around the world in vehicles in many different vertical applications gives us the visibility that brings customers to our doorstep.
CEOCFO: Would you give us examples of some of the most unusual places your service has been deployed and some of the most common places?
Mr. Klein: One of the largest deployments we have accomplished was a year ago when the tsunami hit Japan. One of the third largest cellular companies in Japan, Softbank, has lost over a thousand cell towers during the tsunami. They lost all of their customers’ ability to communicate. We replaced over 340 of these cell towers within a month of the tsunami hitting by selling them our satellite antennas which replaced the cell towers within minutes of arriving to the site. Essentially, a vehicle with our antenna on the top together with a GSM antenna became a cell tower. It could be moved from location to location depending on the requirement. Some of the antennas would also be put on the ground and left sitting there, providing cellular coverage until the actual cellular towers replaced them permanently. This was one of the applications where we were the only ones in the world able to ship this many antennas in such a short time. We also sent a number of people to assist the Japanese with the deployment of those units so that cellular coverage could be restored at a rapid pace. Softbank was the only Japanese cellular company that was the first to, with our technology able to restore cellular communications to their customers affected by the tsunami. That was one of the very unusual and humanitarian types of applications. We also sell many of our antennas to oil and gas exploration companies around the world. They are one of our largest customers and need communication when they are exploring for oil and gas in very remote areas of the world—from Siberia to the Sahara and in many other remote and difficult to access areas around the world.
CEOCFO: What is involved on the customer’s end in terms of setting it up?
Mr. Klein: Very little. Once the antenna is installed on top of the vehicle, which takes about an hour, or if it is being deployed from a transportable case that takes about 10 minutes without any tools, a customer can deploy an antenna with a simple push of a button. Once the button is pushed, the antenna locates the appropriate satellite by itself and connects to the Internet through the modem. This is all it takes to get connected from anywhere in the world. Once connected you can send and receive emails, videos, use the Internet and make voice calls and transmit data. Many satellite news gathering applications use our antennas. These are television stations that broadcast live from specific locations over the satellite. In that case, they also have some encoders and decoders to transmit the signal over the satellite and receive data back video from the studio for the type of news gathering applications that television stations use.
CEOCFO: When you speak with a prospective customer, are they surprised that C-COM Satellite Systems can provide the level of service that you can with the ease that you can?
Mr. Klein: Today, it is much easier than it was 10 years ago, that is for sure. We have over 6,000 antennas deployed around the world and hundreds of testimonials with pictures of antennas, from bookmobiles, mobile libraries, mobile banks, mobile ATM machines, military vehicles, oil and gas exploration vehicles and satellite news gathering applications. We send them a picture and say, “Okay, this is what it looks like, these are the type of customers using it, and if you want to speak with them about their experience with our product and the company can put you in touch.” It is not very difficult today to convince them that this technology exists. However, there are still many people who have never seen a product like this. They would not be able to imagine that you can transmit information from the middle of the Sahara Desert and use the Internet the way you would in a downtown office.
CEOCFO: What is the revenue model?
Mr. Klein: The revenue model is a one-time purchase. Our model is to work with resellers who enable the antenna to operate over the satellite. They are the ones who do the recurring revenue model with our antenna. Our antenna is an enabler for the reseller to generate revenue, not only from selling the hardware but also from generating recurring revenue. We sell the antenna and provide extended warranty and maintenance to the reseller. Essentially, we deal mainly with the reseller. The reseller owns the customer and works with the customer to provide Internet connectivity the way an Internet service provider would provide connectivity to you. Most customers have a need for a large number of antennas. One of our largest oil and gas customers is Halliburton. Many large satellite service providers like Hughes, Viasat, Eutelsat, Gilat, Telesat, Yahsat and others purchase our products for resell to their customers. We have presence on all continents with 6,000 systems deployed worldwide and export 92% of all the products we manufacture to countries outside of Canada.
CEOCFO: Would you tell us about the new product C-COM Satellite Systems has introduced and how often changes are made to products?
Mr. Klein: A new satellite technology has been deployed last year called high-throughput satellites, HTS. These satellites deliver 100 times more bandwidth than the existing, Ku-band satellites that most people have been using up to now. These Ka-band, high-throughput satellites are extremely powerful and deliver a tremendous amount of bandwidth at a reasonable price using much smaller antennas. C-COM has developed a new series of mobile Ka-band antennas to work with these high-throughput satellites and a number of them have been introduced at the satellite show in Washington, D.C. last month. We have already sold close to 100 of these antennas in Europe and North America on the high-throughput satellites that exist there. We will be selling many more in Africa and the Middle East on the high-throughput satellites that will be shortly providing service in those regions. We change antenna specifications almost weekly to fit some customers’ requirements. We manufacture new antennas on a regular basis with new models based on the market demand and also on what satellite providers are putting into the marketplace. We have to be very nimble and follow the lead of these satellite providers because our technology has to change with theirs. It is a very dramatically, changing market and we have to follow it and produce products for this changing marketplace.
CEOCFO: What surprised you most as the company developed and grew?
Mr. Klein: What surprised me most is probably the worldwide acceptance of the product—it had a fairly rapid pace. The other aspect is how fast these resellers came out of the woodwork from around the world—Mongolia to Nigeria—and buy products for resale for application in their own countries. For many companies, the most difficult thing is selling into foreign markets. We have done an extremely good job in becoming a seller of products to a customer base around the world. The beauty of the product is that it works just as well in Siberia as it works in Australia. The credibility and reliability of the product helps. Those would be the surprising things. It is possible to do a worldwide sales effort with minimal cost if you have a great product and can deliver superb support for it and through the process develop a great brand name around that product.
CEOCFO: Why is C-COM Satellite Systems an exceptional company to investors and people in the business community?
One of the reasons is the company’s stock is still very much undervalued
and is not near where it should be, even though it has appreciated
dramatically over the last year. The perception of the valuation of the
company is changing. The stock has hit $1.00 this week. Last year it was in
the range of 50 cents. The company has no debt and it has close to $15
million in the bank. It pays a healthy dividend and its technology is one of
the most advanced in the world. The company has a stellar reputation. Its
customers are the crème de la crème of companies around the world. It also
continues to deliver result year after year and had its 8th
consecutive profitable fiscal year last year and heading into its 9th.
Those are just some of the reasons why investors who want to see a solid
return on their investment should consider C-COM.
“Our mobile satellite antenna products have become the defacto standard for many companies using mobile satellite antenna systems around the world. Since last time we spoke about 3 years ago, we have grown the business, the profitability and have developed a significantly larger customer base. We have also introduced the product in many other countries around the world. In general, we are doing very well as a corporation.”- Dr. Leslie Klein
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