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The Denver Post February 26, 2003

Small satellites put company in orbit

Surprise demand rescues MicroSat

By Jennifer Beauprez
Denver Post Business Writer

Wednesday, February 26, 2003 - Littleton-based MicroSat Systems teetered on the brink of failure when John Roth took the helm as chief executive two years ago.

A $54 million Air Force contract to build low-cost miniature satellites fell two years behind schedule, forcing Roth to seek other customers who wanted smaller, cheaper satellites.

He surprised himself when he found a number of them that could not only save the aerospace startup but help it grow in spite of the brutal economy.

MicroSat's first mission? Working with a Houston company that plans to sell consumers on the idea of sending love notes, keepsakes and DNA samples 22,000 miles into space.

"For awhile we were very afraid of what was going to happen, and now we feel like things are looking pretty good," Roth said.

Last year, MicroSat had 27 employees; today it has 38. Another 15 will be hired by the end of the year, said Roth.

For two years, the company's workers have been building new satellites that weigh 100 pounds and are about the size of a card table. That compares with a typical 10,000-pound satellite.

Unlike most aerospace companies that need hundreds of millions of dollars to start, Roth said MicroSat needs no more than the $10 million it got from two investment firms. He believes the firm should break even this year and turn a profit in 2004.

The first satellite will ride into space in 2005, carrying a solar-powered sail craft built by a Houston company called Team Encounter, which hopes to get 4.5 million people to pay $50 each to put their poems, pictures, DNA and other memorabilia inside a 6-pound capsule.

"There are all kinds of people who would love to be involved with a real space mission," said Charlie Chafer, CEO of Team Encounter.

That can't happen unless Team Encounter makes the launch affordable. And in space, size is directly related to price. MicroSat's satellites will launch for about $10 million compared with $100 million for traditional satellites.

"(MicroSat) can do everything we need without the zeros on the end in terms of cost," said Chafer.

For years, the aerospace industry has sought to make spacecraft smaller and lighter to reduce the costs of sending them into space, said John Pike, an aerospace analyst with GlobalSecurity.org

Yet larger satellites will still be needed to send strong enough signals from 22,000 miles away from Earth, Pike said.

"(MicroSat) will have a niche, but it will be a small niche," Pike said. "You shouldn't expect these guys to quickly overcome and surpass Boeing."

Yet Roth said his company's work has piqued the interest of a number of firms that desperately want a cheaper ride into space - including satellite-TV firms and high-speed Internet companies.

"There are people out there who can't go to Boeing, to Lockheed, because they can't get satellites up for the price they need," Roth said.

MicroSat also is one of three teams competing for a 10-year contract to build small satellites for the Canadian Space Agency.

Other countries may follow suit and consider smaller satellites because of price, said Richard Kolacz, manager of business development at Com Dev Space, Canada's largest space company that provides hardware for satellites.

"Smaller satellites are better- suited to other countries that don't have a very large space budget and cannot afford the financial or risk burden of launching large satellites," Kolacz said.

That's good news to Roth, who admits that not long ago he was worried about making do beyond the U.S. military.

"The economy has been lousy and aerospace is not a growth industry anyway," said Roth. "But we've been growing like gangbusters. Everything has been going very well."


Copyright 2003, The Denver Post