American Satellite Co., the Fairchild Industries partnership with Continental Telephone Corp., expects to make a profit next year for the first in its nine-year history.
"I think we've turned the corner," said Emanuel Fthenakis, the American Satellite chairman, in a recent interview. "I think 1982 will be profitable. Sales may reach $30 million this year, up from over $20 million in 1980."
American Satellite's parent company has spent about $150 million getting American Satellite off the ground. During the last year ASC, infused with the resources of Continental, an Atlanta-based company with $1.1 billion in sales last year, has expanded its operation, moved to new headquarters and increased its staff 20 per cent, to about 300. Continental bought its share of the 50-50 partnership last year for $12 million.
In addition, ASC has won a major $19 million contract from Federal Express, a $5 million renewal of a major military contract, and now has 64 earth stations in place, compared with 40 a year ago. More than 100 earth stations have been ordered from the company.
The Rockville-based company is moving into the teleconference business, with emphasis on a portable camera and screen combination that officials hope will help cut the costs of fixed-camera, studio-like settings that have in the past been proposed for the television meeting rooms. "It's a major part of the office of the future," said Fthenakis.
Although the company now transports signals for Dow Jones & Co.'s Wall Street Journal and The New York Times, it also won a contract this year from Gannett Co. to distribute the newspaper chain's new national news venture, now titled USA Today. American Satellite officials would not describe the fledgling Gannett project in detail.
According to Bruce McClelland, director of marketing services, the company's advertising budget has grown from virtually noting in 1979 to about $400,000 for the last four months of 1980 and $500,000 this year, raising the company's visibility at a pivotal time in its history.
All the activity is designed to position American Satellite to compete in the growing satellite business communications market, a business that for most of the 1970s has been one in search of a market. For all the hoopla about the future of the satellite business, it has yet to produce profits in the business communications field.
"We expect that in the 1980s the business will really take a jump," Fthenakis said. "The 1970s was the decade of data processing and the current one will be the communications decade." Frthenakis said American Satellite could reach the $100 million sales mark by the middle of the decade and could become a $1 billion business. "It is do-able," he said. "The possiblity exists."
Since its beginning, American Satellite cornered much of the high-speed data communications market, while other satellite concerns focused on voice and cable television service, for example.
That is rapidly changing. A new and major slice of American Satellite's competition is now coming from Satellite Business Systems, the McLean partnership of Communications Satellite Corp., International Business Machines Corp. and Aetna Life & Casualty. Thos firms will pump $525 million into that start-up, and expect sales of $193 million by the end of 1984.
In large part because of the size and reputation of its partners, SBS has received a lot of attention in business circles, even though American Satellite has been a forerunner in the development of the digital satellite communications technology on which SBS is expanding. American Satellite officials are of two minds about the SBS venture.
"It's kind of a double-edged situation," said Thomas Gabriszeski, vice president for business development. "They add credibility to the satellite market. Along with us, they've helped push the technology along, but it's hard not to bump heads."
Fthenakis said the SBS aggressive marketing has kept American Satellite officials alert to the competition. "Our reaction is to always worry about competition," he said. "If you don't worry, you're a dead duck."
Also in the company's future is increasing competition from American Telephone & Telegraph Co., a subject on which Fthenakis, a former Bell Laboratories employe, has strong feelings. In fact, Fthenakis testified for the government in the Justice Department's ongoing antitrust suit against AT&T.
"I think AT&T will be a formidable competitor too," he said. "They have the capability, the know-how, the muscle and the brains to become a true high-technology company. They may not make that their priority, but we have a technology expertise that they don't have."
With more than 200 commercial and government customers, American Satellite now offers four classes of communications services. One is a telephone private-line network that links 27 city pairs.
A second service is a digital, high-speed network that sends computer data between earth stations on a company's site. It is used by companies such as Sperry Univac, General Dynamics and Shell Oil.
In addition, American Satellite supplies networks for the government. Finally, the firm's Network Management Services provides custmers with management of their communications networks, including operating systems supplied by other carriers.
The move into new Rockville headquarters, a few miles from the Germantown facility that American Satellite shared with Fairchild, began this spring and is almost complete. The separation gives company officials both the room and the sense of independence necessary to make Continental comfortable.
Fthenakis said the company's biggest problem is finding trained people with which to continue the expansion. The company has set up a masters program at the University of Maryland that permits employes to work three days a week and go to school the other two, in order to develop more communications expertise.