Exclusive Interview With The Chairman And CEO: Globecomm Systems Inc. (GCOM) - David E. Hershberg
January 24, 2012 - The Wall Street Transcript has just published Wireless Communications & Telecom Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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David E. Hershberg, Chairman and Chief Executive Officer at Globecomm Systems Inc., started his career in 1959 at ITT Defense Communications working on earth stations for the first active communications satellite carrier as well as many other early satellite programs. He founded ITT Space Communications, Inc. in 1968; Comtech, Inc. Systems Division in 1972; and Satellite Transmission Systems, Inc. in 1976. During his 18 years as President and CEO of Satellite Transmission Systems, Inc., the company became the global leader in the field of satellite communications ground station systems. Satellite Transmission Systems had annual sales in excess of $110 million, and an installed base of more than 1,000 major earth terminals installed. Under his leadership, the company was a 1992 winner of the New York State Exporter of the Year Award, and it became the first company in its field to achieve ISO 9001 certification. In addition to his duties at Satellite Transmission Systems, Mr. Hershberg also served as the President of the Satellite Communications Group of California Microwave Inc., which included responsibility for EF DATA, Inc. and CMI Mobile Products.
TWST: Please give us a bit of history and an overview of Globecomm Systems.
Mr. Hershberg: We started the company in 1994. Several of us came to Globecomm (GCOM) from a company I had started in 1976, Satellite Transmission Systems. We started with a business building satellite communication earth terminals and that became more of a commodity business. In 1996, we added a service offering for the Internet for developing countries, where we would provide connectivity in Africa, Eastern Europe and other places directly to the Internet. That company was called NetSat Express.
Over the years, out of NetSat Express, we have built a complete service offering encompassing voice, data, media and television. That has gone from being a very small part of our business to about 60% of our business now. But we still build a lot of infrastructure, and one of the things that's important to us is that we can provide complete solutions to our customers. For customers who want to have a network or want to provide services to ships or provide television broadcasting services, we can build the system, we can operate the systems and we can maintain the system. This way the customer only has to go to one company for a solution. Our company employs about 500 people. We have our main headquarters on Long Island. We have five subsidiaries, four through acquisition, and one that we set up on our own. We have one in a company that has a lot of solutions in South Africa and Holland. We have offices in New Jersey. We have a teleport and two offices in Maryland. We have grown almost every year we have been in business. For the year ended June 30, 2011, we'll be close to $400 million in revenue.
TWST: Currently, what are the major products and services Globecomm Systems offers?
Mr. Hershberg: Well, we offer our customers everything pretty much in telecom, media, equipment, systems and services. We are about 60% service and about 40% equipment and systems. On the equipment side, it's complete and it consists of satellite earth stations of all types from very large gateways to small field tactical terminals, maritime terminals on ships, broadcast setters and direct-to-home systems. One of our fastest-growing businesses is our cellular business. We do business with about 15 cellular companies for both CDMA and GSM, plus we install complete cellular systems. We have three teleports we operate and we provide services from about seven more. So we have about 10 teleports worldwide.
We have extensive fiber connections in what we call the Globecomm Cloud, where we can provide services worldwide to pretty much anywhere in the world, including ships on the water, land-based ships and airborne fleets. Then we have these connections via fiber, so we have backup. Whenever possible we can use fiber for connectivity, which in cases may be cheaper than satellite. We manage 25 to 30 private networks. We provide maintenance, broadband, a 24/7 call center, we have about 100 channels of video including Showtime networks. We host cellular companies and right now we are providing service to about 2,500 ships.
TWST: What are the major markets Globecomm Systems services?
Mr. Hershberg: The major market we call government is a combination of U.S. government, defense department, foreign ministries, foreign defenses, the defense forces, NATO and United Nations. These account for about 60% of our current business. Then, we have the shipping lines, where we provide maritime services, broadcast service, cable operators, enterprise companies and cellular companies. That's our five market verticals that we are in.
TWST: Is government the company's largest segment?
Mr. Hershberg: Yes, government is about 60% of our business. This is our largest segment, but as I said, it consists of several addressable markets, including Department of Defense. DoD is about 15% of our business. The other entities within the government include state departments and overseas ministries, the UN, NATO and those kinds of organizations.
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