Here comes Samsung (2/24/23)

Good morning. Welcome to the 218 of you who joined us this week. Hope everyone has a great weekend. And if you’re reading this, Crew-6, godspeed on Monday.

Narrator: The four astronauts imminently headed to the International Space Station were in fact not reading this.

Today’s newsletter: 🔮 Samsung’s space plan🛰️ Dish + EchoStar earnings🗣️ Poll results📚 Payload’s Picks

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Samsung Steps Up to the Plate

Yesterday, South Korean tech conglomerate Samsung shared some color on its own space plans. The tech conglomerate introduced a satellite-to-smartphone communications chip for future phones rather than unveil any flashy features now.

Unpacking the above: We deliberately used the modifier “tech conglomerate”—twice—to describe Samsung. While best known for phones, Samsung is also the world’s second largest high-volume chipmaker by market share.*

• *as far as bleeding-edge logic chips are concerned...

• The company trails Taiwan’s TSMC, which dominates the contract chipmaking market.

Dissecting the modem: Samsung plans to integrate its new non-terrestrial networks (NTN) technology, as the company calls it, into the Exynos line of modem processors. Samsung claims its NTN technology is capable of two-way messaging and HD photo/video sharing.

The Korean firm says it developed protocols “to accurately predict satellite locations and minimize frequency offsets caused by the Doppler shift.” Finally, Samsung says that the next-generation modem will eliminate the need for a separate high-power wireless antenna chip, freeing up smartphone makers to get more creative with their future product lines.

Twas only a matter of time. Samsung’s flagship Galaxy S23 unveiling event this February came and went without a satellite announcement. Samsung was also noticeably absent from Qualcomm and Iridium’s Satellite-to-Snapdragon partnership at CES in January.

But patience is a virtue. Rather than partnering, Samsung seemed to think that building the technology from scratch—and to its own specs—was the right way forward. "When there is the right timing, infrastructure, and the technology…then of course for Samsung Galaxy, for our mobile division, we would also actively consider adopting this feature as well,” Samsung’s TM Roh told CNET earlier this month.

Obligatory “everybody is doing it” paragraph: Everybody is doing it. There’s Qualcomm and Iridium, as mentioned above, as well as Apple’s Globalstar-partnered Emergency SOS on iPhone 14s. SpaceX and T-Mobile are partnered on providing direct-to-cell service that would leverage the Starlink constellation, and China’s Huawei has rolled out satellite-enabled emergency SOS. And don’t forget about Lynk Global and AST SpaceMobile. Finally, there’s enough cellular backhaul plays that we simply don’t have the space to unpack them all.

Payload’s takeaway: For the most part, direct-to-cell technology is still in its infancy, and current constellations don’t have the capacity to support data-rich mobile features at scale. We’re in the earliest of innings for the market penetration (or value generation) of the technology. Still, direct-to-cell is already helping save stranded individuals and has the potential to connect both 1) remote regions and 2) underserved communities.

It’s abundantly clear that the technology will go from a nice-to-have to a default in high-end consumer smartphones over the course of the next decade.

Dish and EchoStar Report Q4 2022 Earnings

Yesterday, Dish ($DISH) reported that Q4 net income increased to $936M, a substantial rise from $552M in the prior year. The revenue story was not as bright: Dish generated $4.04B in Q4 sales, down 9% from the prior year.

The culprit for revenue declines is a lower subscription base across all products. In the fourth quarter, total TV subscribers declined by 268,000 to 9.75M. Satellite TV lost 191,000 subscribers, while Sling TV (a streaming service) lost 77,000 over the same period. The respective services finished the year with 7.4M and 2.3M subs, respectively.

• Meanwhile, on the telecommunications front, Boost Mobile lost 24,000 subscribers and finished Q4 with 8M subs.

Dish has struggled to gain footing in its two product markets as the company faces headwinds in both cord-cutting and 5G network markets. As a result, $DISH shares are down 50% in the last year. Despite these headwinds, investors welcomed yesterday’s news of increased profitability. $DISH missed on revenue but beat on earnings. The stock closed up 5.20% on the day.

EchoStar

EchoStar ($SATS), the company behind Hughes satellite internet, also announced earnings yesterday. The Q4 results:

• Revenue was $500M, which is flat YoY.

• Net Income was $47.6M, compared to -$80.1M in Q4 of 2021.

• Hughes satellite network had 1.2M subscribers, losing 57,000 customers in Q4.

The competition: The Hughes GEO satellite network is facing a stiffer challenge from the lower ground (aka LEO). In 2022, Starlink grew to 1M subscribers—and will likely pass Hughes soon. EchoStar management has conceded that a portion of that growth was due to customers who switched over from Hughes.

Mix shift: Hughes now derives 42% of sales from enterprise customers, up from 35% last year. Since enterprise clients are generally stickier than the consumer market, the mix shift could help stabilize subscription churn going forward.

+ Stock pulse check: $SATS beat expectations on both revenue and EPS, sending the stock up 13.5%.

To the Moon…then Crashing Back Down to Earth

Last Friday, we asked you to predict the price of Intuitive Machines ($LUNR) shares as of market close on Thursday, 2/23. The stock ran as high as $80 earlier in the week, but ultimately stock closed at $20.30 yesterday, shedding 75% over the course of the day.

For those of who voted in last Friday’s poll, 31% just narrowly predicted/guessed correctly that it would close in the $20-$30 range:

• <$10 (16%)

• $10-$20 (28%)

• $20-$30 (31%)

• $30-$40 (15%)

• >$40 (10%)

Write-in comments via two readers:

• “The volatility is due to the low public float.”

• “Looks like the typical SPAC pop (aka: pump and dump)”

In Other News

• Momentus ($MNTS) dropped a ton of news yesterday: three Vigoride orbital service vehicle launches are on the books for 2023; the in-space transportation company raised $10M and settled a class-action lawsuit; and finally, Vigoride-5 is functioning nominally.

• Garmin ($GRMN) reported quarterly revenue of $1.31B, a 6% YoY decrease. Strong aviation GPS products revenue offset weak demand for the company’s fitness tracker.

• China launched the Zhongxing-26 communication satellite aboard a Long March 3B, and a remote-sensing satellite on a Long March 2C.

• Polaris Dawn is targeting a summer 2023 launch.

• Vulcan’s inaugural flight has been delayed by six weeks for further engine testing. The new target date is set to: May the 4th…be with you.

The (Imagined) View from Venus

Here’s an artist’s rendering of an active volcano on Venus to send you off to the weekend. According to JPL, a study has found that the “squishy” outer shell of Venus may be resurfacing the planet.