Nice rebound today. The 19 level held quite firmly.
Here are Readware comments (including the excellent post "Concept Stock" at the bottom):
=============================
Subject: Re: Price drop
Date: Wed, Jan 7, 1998 21:24 EST
From: Readware
Message-id: <19980108022400.VAA29557@ladder02.news.aol.com>
Yes-- rumors today of another launch delay.
Possible reason for the rumors this time, as told to me today: Globalstar was trading at its "50 day moving average" ($48), and LOR "broke its on the upside" ($21 5/8). "The shorts had to brake the upward move" (to continue the quote of what was said)-- spread rumors that the G* launch was delayed again, and "got the momentum in both stocks broken. The suckers sold."
Wall Street has been engaged in duplicity for years,-- the latest example of which is in its fixing prices in securites (as the $1.1 billion in payment it just agreed to pay to litigants evidences). Wall Street's highly paid employees get away with the duplicity 99% of the time because of the temporary effect its duplicity usually has. The effect lasts just long enough for a group on Wall Street to cover its (their) losses, or make a profit.
The duplicitous behavior, on the other hand, is not temporary. It continues because of shareholder tolerance-- so long as the effects of the duplicity remain temporary.
Subject: Re: Less than a month!
Date: Thu, Jan 8, 1998 09:15 EST
From: Readware
Message-id: <19980108141501.JAA21247@ladder01.news.aol.com>
No, there's no launch reschedule. It has been set for GMT of 12:28, with lift-off at 13:42, on 5 February.
Subject: Re: New Pres/C.O.O.
Date: Thu, Jan 8, 1998 19:53 EST
From: Readware
Message-id: <19980109005301.TAA04554@ladder01.news.aol.com>
Nothing negative.
Subject: Re: Satellite Tool Kit
Date: Sat, Jan 10, 1998 12:39 EST
From: Readware
Message-id: <19980110174001.MAA12733@ladder01.news.aol.com>
I don't know the company, but it is not unusual for a satellite company of Loral's size to have many subcontractors. Some of them are very large companies, as in the case of Sun Microsystems being the network manager for Globalstar, and Oracle Database Company (I think that is known as ORCL on the NASDAQ Market) doing various SQL for Loral.
Subject: Re: Current Rumor
Date: Sat, Jan 10, 1998 12:57 EST
From: Readware
Message-id: <19980110175700.MAA15226@ladder01.news.aol.com>
Regarding rumors: Actually what is needed is tape recorder of all calls made from all Wall Street firms to their clients so that the source of these rumors on Globalstar can be pinpointed, and the rumor spreader(s) fired.
After all, that is how Wall Street Over the Counter dealers were caught in price fixing of securities-- by tape recording their phone conversations--, to which charge last week they agreed to pay $1.1 billion. The full story of this has been in THE NEW YORK TIMES over the past few weeks. Of course, I doubt any of those people involved, or the management of the firms involved, in any way were reprimanded or fired. Kind of reminds one of "the
den of thieves" passage in Holy Writ. In that case, at least, the money changes were whipped (as I recall the passage). Apparently on Wall Street you get a bigger bonus instead.
In any event, I posted last Monday the GMT launch time as announced by Boeing: in English (instead of GMT) it is 8:32 AM on 5 February.
Subject: Re: Current Rumor
Date: Sat, Jan 10, 1998 16:04 EST
From: Readware
Message-id: <19980110210400.QAA11816@ladder01.news.aol.com>
They maintain launchpad 17a, and the Delta II #7420 (I believe that is the number-- I am not at my desk) that is launching the G* satellites.
Subject: Re: first call earnings estimates
Date: Mon, Jan 12, 1998 00:03 EST
From: Readware
Message-id: <19980112050300.AAA07267@ladder01.news.aol.com>
Loral will "lose" $.55/share in 1998. It will not "lose" $.23/share. The "loss" is on paper only, and does not reflect an actual devaluation of the company's net assets. For the money "lost" a corresponding asset is manufactured for which money has been expended. The money expended is booked as therefore a "loss". E.g, if you have $300,000 and then spend $300,000 on a home, you have lost "cash" but not equity. The "cash" lost has actually been
converted into an asset, sc., a house.For the very large part, the "loss/share" is an accounting entry, (which has a slight amount of interest cost in it for G* bond payments, from which bond proceeds G* satellites and gateways were build [the assets]).
Strictly (and accurately) speaking, Loral will not be running a negative EBITDA in 1998, which is what investors want to know. A company's value is not calculated exclusively on its net earnings/share. Its cash on hand, its cash flow, its debt to equity ratio, its "quick assets" ratio all go into putting a multiple on a company's "earnings".
The long-term growth rate you cite, which I have seen also, is the growth rate for DBS satellite companies. How Loral can have a 10% median growth rate, when it is not at DBS company at all, is a matter of interest. Ironically, DBS companies are currently running a negative EBITDA, just like cable televesion companies. While DBS companies will probably turn EBITDA positive in 1999, it is not known when (if ever) Cable TV companies will. And you
will notice these companies are not priced on their "net earnings". Just look at the pice of Cable Vision. I believe it is around $90/share.
Loral's normalized growth rate (assuming launches of all satcoms and GEOs occur within the time frame management has indicated) from 1996-2001 should be, when the investor looks back from 2001 to 1996, 37%.
Subject: Re: RESISTANCE
Date: Mon, Jan 12, 1998 00:11 EST
From: Readware
Message-id: <19980112051101.AAA26062@ladder02.news.aol.com>
I believe the term that was meant is "support", not "resistance".
Subject: A Concept Stock?
Date: Mon, Jan 12, 1998 22:13 EST
From: Readware
Message-id: <19980113031301.WAA15179@ladder01.news.aol.com>
I've been asked today, and maybe others at another time here too have been, what my view is of the claim of G* as just a "concept" stock.
Not quite sure what is meant by that term, although I certainly know it is a "rumor" stock.
If by concept is meant a "story", that "story that never ends", I would offer the observation that (1) the partners in the G* consortium (GE, Vodaphone, Qualcomm, Daimler Benz, Hyunda) do not seem to think so, (2) the worldwide telco network that has guaranteed G* 1 billion billable minutes to Loral/G* over the life of the G* first generation constellation probably doesn't, (3) the telephony demand (validated in seven major consultancy studies
[Booze Allen, Peat Marwick among them], not including the study done by the International Telecommunications Union) in vast global pockets without access to cellular or copper as a market for G* probably indicates it is not, (4) the fact that, e.g., the Chinese Ministry of Post and Telecommunications has contracted to build fixed-site terminals throughout China for G*, and (5) that G* has asked four years earlier than anticipated for licensing for a
second generation system--this all probably indicates that G* is not just a "concept", that "story that never ends".
It probably would have been easier for Loral to build the whole G* system first, and then offer the common shares to the public, thereby avoiding all this volatility in the common shares of G*. After all, they really did not need the $200 million the original G* common stock offering brought them. Loral could have gotten that money from Lockheed in a blink of an eye. Loral could have constructed the system, launched the LEOs, and then offered the
stock at a much higher price to the public. Almost $3 billion of a satellite constellation (with gateways) at that time would be in existence, and for sure the price would not have been $20/share. 10 million shares for a $3 billion system-- I think that is $300/share, give or take.
I don't know if "concept" stock is a Wall Street term, but if what is meant by it is an idea that may or may not work in actuality, I do not know of any evidence that exists to restrict it to that status. And I certainly do not see any evidence indicating that G* (or Iridium or ICO Global's proposed system, for that matter) is just a "hope" of some major companies for new business. Just talk to some people at Alcatel and see how much "hope" they
have. I don't think they know the meaning of the word.
A one billion billable minutes guarantee to G* by the telcos (that's in the G* prospectus, by the way) is probably the first indication that it is not just a hope.
I am told that the "charts" say this, the "charts" say that. That there are "support" levels, "channels", and all that. The charts say Globalstar is going to $30, e.g. "Right now it's only an idea on paper, and earns no money".
Well, we have an interest in a company's technology, which I won't name. The company has a good satellite product. For two years it traded at a level that I was told by a Wall Street trader the charts showed as "rock hard support" at a certain price. That stock is now half the price of that chart's "rock hard support". If by support is meant that through which something cannot fall (and I am told that is what is meant by support price), then so much
for "charts", I would imagine.
That is my response to the question of whether Globalstar is a "concept" stock. I could have answered far more certainly the question "Is it a rumor stock?" |
