ViaSat on New Trajectory Following Deal to Create Satellite-Based High-Speed Internet

2/3/10Follow @bvbigelow

It was a big deal in October when ViaSat (NASDAQ: VSAT), the Carlsbad, CA-based specialist in satellite-based communications technologies, announced it was acquiring WildBlue Communications, a suburban Denver, CO-based internet service provider. The acquisition, once revealed, made a lot of sense. As a satellite-based provider of high-speed Internet service in mostly rural communities, WildBlue made a good fit with ViaSat’s broadband networking business.

But the size of the transaction, a cash-and-stock deal valued at $568 million, was a sign that ViaSat has attained a higher plane of corporate existence. While it did not rank among the 10 biggest M&A deals of 2009 (or even among the tech industry’s 10 biggest M&A deals), it was among the biggest venture-backed M&A deals in the last three months of last year. It serves as one more indication that the 24-year-old company that prides itself on its steady growth and stability changed its trajectory dramatically two years ago when it announced plans to build and launch its own $450 million communications satellite to provide high-speed Internet service.

To get a better understanding of ViaSat’s changing strategy, I recently sat down with chairman and CEO Mark Dankberg, who co-founded the company in 1986 with Mark Miller and Steve Hart. (When we met last month, Dankberg told me the ViaSat-1 satellite, which is being built by a subsidiary of Loral Space & Communications, remains on schedule for launch in 2011.)

The ViaSat co-founders’ initial strategy was to parlay their expertise in military satellite communications into contracts for engineering and proposal support with defense prime contractors on major satellite programs. Over time, they expanded beyond government communications by developing a variety of satellite-based equipment, software, and services for commercial customers.

By 2007, the year ViaSat’s revenue surpassed $500 million for the first time, Dankberg says the company was on the threshold of deciding whether or not to build its own satellite. As Dankberg explains it, the company had been in the satellite business all along, so the core issue that emerged was bandwidth, and the realization that satellite-based Internet users—like Internet users everywhere—have a voracious appetite for more of it.

But the bandwidth that ViaSat could … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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