Hmm. So I guess the numbers weren't just "background noise" after all. Judging from the stock's price move this morning, investors weren't at all willing to dismiss GeoEye's
But just because I wasn't right in my prediction, doesn't mean Wall Street is right to be writing down this Motley Fool Rule Breakers recommendation today. Fact is, things are looking up for GeoEye. But before we get to that, let's examine what went wrong:
Uncle Sam wants his cut
After extensive study, GeoEye finally concluded that it owes Uncle Sam some money. Basically:
- The Feds are paying $237 million toward the cost of building the new GeoEye-1 satellite.
- GeoEye miscalculated when it needed to pay taxes on this income.
- As a result, it may have incurred as much as $35 million in interest and penalties.
- GeoEye's revising its financials for the past few years to account for the goof.
- But it's also asking the IRS to look the other way on interest and penalties. (Fingers crossed.)
Complicated, I know. But take heart from these words by CFO Henry Dubois: "In summary, our tax liabilities have not significantly changed ... We are confident that we've put these issues behind us ..."
So all the tax stuff is history at this point. Now let's talk about the future. GeoEye's revenue declined primarily because while it was waiting to launch GeoEye-1, rival satellite snapshooter DigitalGlobe (DG) put is own "NextView" bird in orbit. "The National Geospatial-Intelligence Agency ... may have reallocated imagery orders to our competitor" ... and away from GeoEye.
Logically, though, if Boeing
Ah, predictable revenue streams. That should make Wall Street happy.
Meanwhile, investors can smile at some other good news: Lockheed Martin
Check out our last several articles on GeoEye:
Investing in high-risk, high-reward "flyers" is the name of the game at Motley Fool Rule Breakers. If that's a game you're willing to play, take the service for a spin for free and see what other ideas we have in store.