Notes from the Shareholders' Meeting Q&A session:
One of the most significant things that I see that the market is missing on DBSS is that the announcement listed below effectively took away the need to sign with ALA immediately to perfect the FCC license:
biz.yahoo.com
The text in that release does not clearly say that.
"We are gratified to have partners with the international prestige and qualifications of SSTL and Eurockot, who will enable DBSI to stay on the critical path toward its in-service date," said Fred W. Thompson, president and chief executive officer of DBSI.
"The satellite system will utilize the license issued by the Federal Communications Commission on April 1, 1998 to E-SAT, Inc., a company jointly owned by EchoStar Communications (Nasdaq: DISH - news) and DBS Industries. DBSI said it expects to launch the first group of three satellites in the first quarter, 2001."
The Monty report made the ALA signing appear to be the significant milestone for DBSS in securing the FCC license in had gotten, but DBSS satisfied the FCC requirement by signing the above agreements. Reading the release that is not as clear as what Monty had said regarding the ALA signing. The words "stay on the critical path" and "utilize the license" did not come across to the market as the FCC license is secure. Thus, IMHO, we have suffered stock price weakness.
Many of the shareholders questions made that point clear to me. At least 4 questions were directly when will DBSS sign the ALA contract. Having signed Eurockot and SSTL did what was needed for the FCC and perfected the license. Fred reported that the next required FCC discussions would be in September 2001, which will be after the system should be up and working.
That clarification, IMHO, was the most significant thing in the shareholders meeting. I wish the original release had made that point as clearly. It might have diffused the ALA signing thing as such a significant item in the markets mind.
As to ALA Fred reported that it is going through downsizing and thus is slower than normal to accept contracts. It is in the conversion from a government of France owned and supported company to becoming an independent company. That is causing slow decision making and prompted DBSS to sign directly with Eurockot and SSTL to secure the license. ALA is still moving and Fred has been spending a lot of time in France. The DBSS contract will be the largest private contract that ALA space has done. So they are taking their time to understand what they are on the hook for, and given their downsizing environment, probably trying to figure out how to CYA it.
ALA will also get landing rights to 44 sites around the world in the French territories and France. Fred explained Landing Rights is actually a backwards term because it is just a place on land from which to transmit to space and not to receive from space. But it appears the landing rights issue is not a problem, just an effort to coordinate.
Why France was brought up too? It seems the French started this whole idea of having satellites above the earth for communications. They are several years ahead of the U.S. in their thinking and development on this subject. And ALA space division has been in the forefront of that effort. So ALA's internal resources are key to the process. Getting past the gatekeepers in the changing management, who for the first time are dealing with downsizing appears to be the real issues. Once done this should make a program that works.
ESAT license flip will happen according to Fred, but no date was given. It seems that ESAT's bankers are putting pressure on ESAT, which in turn is helping DBSS to get ESAT to the table. The problem appears to be that the Monty report got bigger eyes on the ESAT's people about what they should get for the license. Fred seemed very confident that a deal would be struck soon. But after the ALA debacle was not going to give any dates.
Orbcomm's, our nearest competitor, selection of data transmission frequency and approach causes them not to be useable in Europe. The noise level from their equipment interferes with the European utility companies. Their narrow band versus DBSS CDMA is very significant. More details in Fred's presentation on this topic.
New Star, a wholly owned sub of DBSS, will be used like Iridium's approach to lower Gross Receipts taxes, an offshore company for operations which has no Gross Receipts tax.
SSTL is building (Fred reported construction is underway now.) 6 satellites that will be separated into two different launches. So each launch will contain 3 satellites. The ALA deal is to guarantee that two of those birds per launch work to perfection or DBSS gets money back, performance and damages from ALA.
Those last two items tell me that Fred is doing a good job of watching out for the company and its shareholders value.
As to a CFO, still looking. They had good discussions with Iridium's ex-CFO but did not get to closure and apparently won't. But they want someone of that caliber. The problem is there are so many Internet start-ups grabbing CFO's that they are in short supply. Accept for me, I guess…
NASDAQ listing. No dates. Fred said the Equity test was much closer today then ever before. Which is primarily the SSTL and Eurockot investment, but Fred did not mention that. But the CFO hiring will be significant as will the signing of the ALA contract. It appears that the chips are all lining up to happen in a hurry when they start to fall. IMHO the sequence will be:
1) ESAT license control flips from 20%/80% to 80%/20% upon signing some type of note that helps ESAT will its debt.
2) ALA deal is signed
3) The bankers, of which Monty is one being talked to, immediately will fund the company
4) Broker house recommendations return (Fred meets with one on Tuesday next week, whether they write an report and whether it is favorable or not is in no way determinable at this time).
5) A CFO will be found
6) NASDAQ listing will come last because management has a lot to do to get the above done.
7) DBSS proceeds to launching and launches satellites in Q4 2000 or Q1 2001 System comes on line in mid 2001
The above is my synopsis of the Q&A portion of the Shareholders' Meeting. I'll summarize Fred's presentation is a separate message. I did not want to put in this effort if no one was reading, but since you asked.
Later, Dennis
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