On the other hand, this is why we know THAT ORB will soar, but not when....Friday October 1, 9:01 am Eastern Time
Company Press Release
SOURCE: Banc of America Securities LLC
Satellite Industry Growth Will Outpace the Overall
Communications Market, Banc of America Securities
Analyst Tells Investors
SAN FRANCISCO, Oct. 1 /PRNewswire/ -- The following is being issued by Banc of America Securities, a member of the
National Association of Securities Dealers, CRD number 26091:
The satellite sector is expanding at a rapid rate and is poised to grow even more quickly than the entire communications market,
according to J. Armand Musey, a satellite industry analyst for Banc of America Securities.
(Photo: newscom.com )
``The communications market is growing rapidly, and satellites currently occupy only 2.3 percent of that market,' said Musey.
``We believe that number will grow to 6 percent over the next ten years, meaning that the satellite industry should grow faster
than the overall communications industry.'
Musey's comments came at the 29th Annual Banc of America Securities' Investment Conference, which runs through October
1 at the Ritz-Carlton Hotel in San Francisco. This former Montgomery Securities' conference bears a new name but boasts a
program that lives up to its impressive reputation. The five-day conference features 250 presentations from companies that are
driving the Business Services, Consumer & Retail, Energy, Entertainment, Media & Telecom, Financial Services, Health Care,
Industrial Growth, Real Estate & Lodging and Technology industries.
Projected satellite industry growth between 1998 and 2003 is estimated at 16.1 percent (CAGR), bringing it to a $182 billion
industry by 2008, Musey asserts. He sees a number of trends driving this industry's growth including rapid technological
improvement in satellite construction versus the terrestrial technology. Moreover, this new technology is faster and more reliable
than ever. Musey also says that while satellites often complement the terrestrial market technology in metro areas, they are often
the only communications alternative in rural areas.
Satellite companies' ability to not only complement existing terrestrial services but also provide those same services has made
them attractive investments in the communications marketplace. Satellites are capable of providing cable television, audio
broadcasting, high speed data transfer, cellular, paging and messaging services, and Internet access to both rural and urban
communities. In the long run, Musey expects that satellites will capture 5-15 percent of any of these communications markets.
``Contrary to conventional wisdom, as terrestrial services expand, the demand for satellite communications also increases,'
explained Musey. ``As services in the terrestrial communications systems expand in metro areas, more rural residents will desire
the same capabilities, and satellites often offer the most cost-effective means of delivering these services to them. It is also
important to note that cellular services only cover 20 percent of the U.S. landmass. This leaves a lot of room for satellites to
serve as a cellular fill-in.'
The satellite industry has the clear advantage in the current communications market. Satellites offer greater bandwidth than most
other technologies and reach potential users across the entire continent with one single satellite system. And for applications
such as Mobile Satellite Telephony Services (MSS) and Little LEOs, the mobility of satellites offers the only cost effective way
to provide service over a wide area, while providing immediate service to an entire continent upon deployment. On the other
hand, satellites include some possible costs, risks, and limitations. There are very high, fixed costs in rolling out a single satellite
which take two years to build, but once it is built it can cover the entire continent and there is a very low marginal cost to add
more customers.
Of the three sectors of the satellite industry, the ``mass market' sector, with Direct to Home service (DTH), MSS, and
Multimedia Satellite Services (Broadband), is truly driving the industry's growth. The niche market sector providing service for
Little LEOs, satellite imaging and Digital Audiop Radio is smaller, but highly profitable. The infrastructure sector is the mainstay
of the communications industry offering Fixed Satellite Services, ground equipment, satellite manufacturing, and launch services.
With such a rapidly developing industry and primarily early stage companies with the highest growth in discrete sub-sectors,
valuations of these companies has traditionally relied on hitting milestones. Musey says that management is the most important
factor in picking satellite stocks due to their high company-specific risk.
Musey's satellite industry stock picks include Loral Space and Communications* (LOR, $16-15/16, Buy), Hughes Electronics
(GMH, $54-1/16, Buy), Gilat Satellite Networks (GILTF, 53-1/2, Strong Buy), PanAmSat* (SPOT, $38-11/16, Strong
Buy), and Orbital Sciences (ORB, $17-5/8, Strong Buy).
Banc of America Securities LLC (BAS), a subsidiary of Bank of America Corporation, is a full-service investment bank and
brokerage firm. With principal offices in San Francisco, New York City and Charlotte, BAS employs more than 4,000
associates in offices around the country, and with affiliates, offers capabilities worldwide.
Bank of America Corporation, with $614 billion in total assets, is the holding company for one of the largest banks in the U.S.,
with operations in 21 states and the District of Columbia.
Banc of America Securities LLC currently maintains a market in SPOT. Banc of America Securities LLC was co-manager of
a public offering for LOR in the last three years.
SOURCE: Banc of America Securities LLC
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