SEATTLE (Reuters) - Boeing Co. said on Thursday it will launch 40 of the 80 satellites for Skybridge LP's planned European multimedia network and will buy a minority stake in the company.
The companies did not give a value for the deal but analysts estimated it at $400 million and said it would boost Seattle-based Boeing's battered Delta rocket program and raise Boeing's bet on the embryonic and potentially blockbuster satellite communications market.
"It shows Boeing wants to become a player in the broadband communications area,'' said Marco Caceres, senior space analyst at Teal Group.
Boeing already owns a stake in Bellevue, Washington-based Teledesic LLC, which plans an ambitious "Internet in the sky'' network, but the Skybridge launches will begin two years ahead of Teledesic's, in 2002.
"Teledesic is so far away from being launched that Boeing is hedging its bet. The market is so lucrative they want to get involved in it sooner,'' Cacares said.
Communications companies have drawn up plans for networks of hundreds of satellites, each costing tens of millions of dollars to launch.
But some, like ICO Global Communications Ltd. and Iridium LLC, have run out of cash recently, and Boeing and satellite makers like Motorola Inc. have stepped in with financing to ensure the market survives its growing pains, analysts said.
"Boeing is buying in to ensure they are a major supplier to the commercial launch market and to ensure these projects get financed and come to fruition sooner,'' said Anita Antenucci, space analyst at Quarterdeck Investment Partners.
Boeing said it will provide two Delta 3 rockets carrying four satellites each and four advanced Delta 4 rockets carrying eight satellites each for Skybridge.
"Our growing manifest is reassurance that Delta is continuing to evolve to meet the needs of the global satellite community,'' said Jim Albaugh, president of Boeing Space and Communications.
Boeing's rocket program has been scrutinized after three accidents in the last 15 months. The first two Delta 3 launches failed and a misfired Boeing booster engine spoiled the launch of a Lockheed Martin Corp. Titan 4B.
An outside probe last month concluded weak quality control and poor internal communication caused those failures, which cost more than $3 billion in lost space hardware.
"The Skybridge deal means Boeing can say 'we've had problems, but people still have confidence in us,''' Caceres said.
Skybridge chose Boeing over France's Arianespace, reflecting competition between Aerospatiale, which through the EADS aerospace consortium oversees Arianespace launches, and Skybridge's parent Alcatel(CGEP.PA) , analysts said.
"A decision of Alcatel in favor of Arianespace would have meant indirectly supporting its most direct competitor,'' said one European analyst.
But U.S. analysts hailed the contract as a coup for Boeing.
"It definitely shows they put a competitive offer ... whether it was reliability, price or a combination of both, in front of a European supplier and won,'' Antenucci said.
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