Boeing completes its purchase of Hughes satellite operation

Associated Press

EL SEGUNDO, Calif. — The Boeing Co. formally took control of Hughes Electronics Corp.’s space and communications unit Friday, completing a $3.75 billion deal that makes Boeing a dominant player in the satellite communications industry.

Hughes’ expertise also will allow Boeing to develop new businesses providing broadband Internet and global positioning services for military and civilian aircraft, said Phil Condit, Boeing’s chairman and chief executive officer.

With the deal, Boeing picks up Hughes’ backlog of more than 40 satellite orders valued at about $5 billion. Boeing estimates the acquisition will boost revenues from Boeing’s Space and Communications division by about 35 percent to nearly $10 billion in 2001.

About 9,000 former Hughes employees were switched to the Boeing payroll as part of the deal.

"We think we’re putting together the premiere satellite capability in the world," Condit said.

The acquisition will benefit Boeing on several fronts, said Marco Caceres, an analyst with Teal Group in Fairfax, Va.

Equally important to Hughes’ satellite manufacturing capability, Condit said, is the intellectual capital Boeing can tap to develop new applications for commercial satellites, including the use of wireless broadband systems to connect aircraft to the Internet, GPS networks and other systems.

One possible application Boeing already is exploring is the use of global positioning technology to improve air traffic control at airports. Another would be in battlefield management systems. Technology could be used to let commanders know exactly where their units are at any given time.

Boeing already is developing a system, Connexion by Boeing, designed to provide high-speed Internet access for passengers on commercial airlines. The system is scheduled to become operational in late 2001 or early 2002.

Hughes was the world’s leading satellite maker before the acquisition. Hughes approached Boeing about the sale last year because Hughes executives wanted to focus their attention on the company’s fast-growing DirecTV satellite-to-home entertainment business. The sale was announced in January.

Shares of Boeing were down 6.3 cents to $61 Friday on the New York Stock Exchange, where shares of Hughes Electronics were up $1.52, or 5 percent, to $32.02.

Seattle-based Boeing attempted to buy Hughes in 1985, but was outbid by General Motors, which agreed to pay $5 billion in cash and stock for the satellite maker.

The new satellite unit, called Boeing Satellite Systems, is expected to have operating margins of 10 percent or better, said Tig H. Krekel, president of the unit. It will produce 16 to 18 satellites per year.

The demand for wireless broadband and satellite to home television systems should generate growth of 10 percent to 15 percent a year in the commercial satellite industry, he said.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

More in Local News

NO CAPTION NECESSARY: Logo for the Cornfield Report by Jerry Cornfield. 20200112
No right turns on red gets a look, a bid to expand sports betting arrives

It’s a new week. Here’s what’s happening on Day 22 of the 2023 session of the Washington Legislature

A man was injured and a woman found dead Sunday night after an RV fire in Marysville. (Marysville Fire District)
Woman dead, man burned in Marysville RV fire

The Snohomish County Fire Marshal’s Office and Marysville Police Department were investigating the cause of the fire.

James Lewis
COVID still ‘simmering’ in the county, while booster uptake remains low

Meanwhile, flu and RSV cases have plummeted, suggesting the “tripledemic” could — emphasis on “could” — be fading.

Herald publisher Rudi Alcott
A note from the publisher

The Daily Herald publisher Rudi Alcott discusses our new publishing schedule and newspaper delivery by mail.

Locals from the group Safe Lynnwood gather in front of the Ryann Building on 196th Street SW to protest the opening of a methadone clinic in the building on Sunday, Jan. 22, 2023, in Lynnwood, Washington. (Ryan Berry / The Herald)
Despite controversy, Lynnwood opioid treatment center opens its doors

For weeks, protesters have objected to the center opening near Little League fields and a Boys and Girls Club.

CEO Amy King standing outside of a Pallet shelter. (Courtesy of Pallet)
After rapid rise, Everett’s Pallet hits milestone: 100 shelter villages

Temporary home manufacturer Pallet hires locals who have “experienced homelessness, substance abuse or the justice system.”

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Boil water advisory in effect for 75 Snohomish homes

A water main break resulted in outages and possible contamination Sunday. Service was expected to return by Wednesday.

Ismael Cruz-Sanchez speaks at his sentencing at the Snohomish County Courthouse on Monday, Jan. 30, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Driver in fatal I-5 crash in Arlington gets 10 years

Ismael Cruz-Sanchez had a lengthy history with impaired driving. He pleaded guilty to killing Jason Vogan, 45.

The building at 307 Olympic Avenue, seen on Thursday, Jan. 26, 2023, is home to the office of Omni-Mana Services in Arlington, Washington. (Ryan Berry / The Herald)
Charges: Arlington drug trafficker masqueraded as a pastor

Prosecutors say Steve Parker led a double life, helping people in addiction while dealing drugs across Western Washington.

Most Read