Cisco (Nasdaq: CSCO), the world’s largest manufacturer of telecommunications equipment, is making its first entry into satellite communications and one of the big companies that stands to gain as a result is Israeli satellite manufacturer Gilat Satellite Networks (Nasdaq: GILTF; TASE: GILTF). As part of a cooperation agreement between the two companies, Cisco will incorporate Gilat’s technology in its routers. Gilat announced today that its SkyEdge technology met Cisco’s criteria. Its technology will offer Cisco customers voice, video, data and wireless communications transmission over high speed satellite networks.
Gilat develops, manufactures and markets Very Small Aperture Terminals (VSATs) and products and services for satellite-based communications networks. The company has a policy of not disclosing the financial details of the contracts it signs and accordingly, it has given no such details about the deal with Cisco. The deal is likely, however, to generate substantial revenue for Gilat, and it will allow telecommunications providers who currently use Gilat’s SkyEdge technology, to offer satellite communications services, using Cisco’s routers. In addition, Gilat’s subsidiary Spacenet, will offer support services to Cisco customers, who will be able to buy Cisco routers and receive services from Gilat through Spacenet. They will also be able to choose between a regular service or a periodical service suited to their individual requirements.
Gilat CEO and president Amiram Levinberg said, “Teaming with Cisco in developing and marketing interoperable networking solutions truly differentiates Gilat in the VSAT market and shows our commitment to provide our customers with an edge beyond the latest technology, via its cooperation with market leaders. We believe Cisco's interest to add satellite communication capability into its enterprise routers is good news for the satellite industry in general as it expands the addressable market for satellite communication technology and services.”
Gilat currently has a market cap of NIS 183 million. Over the last two months, it reported the winning of several contracts, including contracts to supply satellite stations to the Mexican education ministry, and the supply of communications equipment and services to Angola Telecom. The company posted $58.6 million revenue in the first quarter of 2006 and pro-forma profit of $2.7 million.
Published by Globes [online], Israel business news - www.globes.co.il - on June 12, 2006
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