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Strong start for IPO from satellite imaging firm DigitalGlobe

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More hope for the still-anemic market for new stock offerings: Satellite imaging firm DigitalGlobe Inc. is off to a healthy start today after its initial public offering was priced above expectations late Wednesday.

The stock rose as high as $25 when trading began this morning, up from the offering price of $19. The shares have since pulled back and were trading at $21.62 at about 10:50 a.m. PDT, up 14% from the IPO price.

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The Longmont, Colo.-based company provides satellite photography to the federal government and to commercial users including Google Inc. and Microsoft Corp.

The deal is just the fifth IPO in the U.S. market this year. The last one was from Rosetta Stone, the producer of self-study language-learning programs. Rosetta went public at $18 a share on April 15; it’s now trading around $22.

In a market starved for true growth opportunities, investors see one in the satellite-imagery business: The so-called remote sensing market is expected to grow from $7.3 billion in 2007 to $9.9 billion in 2012, according to a study DigitalGlobe quotes in its prospectus.

DigitalGlobe earned $54 million last year on revenue of $275 million.

From Bloomberg News:

The company attracted investors during an IPO drought because of its ties to the government and its fleet of satellites, said Matt Therian, an analyst at Renaissance Capital in Greenwich, Conn. DigitalGlobe is launching a third satellite this year, which may help almost double revenue. ‘This industry has a lot of barriers to entry: It takes $400 million to $500 million to build a satellite, and you need a relationship with the federal government,’ he said. ‘If they can get their next satellite up there without any issues, it has the potential to throw off a good bit of cash.’

The company had hoped to fetch an IPO price of $16 to $18 a share, but the underwriters were able to get $19.

Of the 14.7 million shares sold in the deal, DigitalGlobe offered 1.3 million, raising about $25 million. The rest were sold by hedge funds and other investors that had previously backed the company.

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-- Tom Petruno

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