The bonds were issued to reduce debt! YES! But...
Even though the bonds are not callable for a few years,
bond holders have the right to exercise at any time before
the notes are due. In this case, because the stock price
is over the bond EXERCISE price, it is appealing for bond
holders to convert at any time... Once the companies earnings
are stronger, and the backlog starts coming out into actual
revenue, this will not be a problem at all... The high valuation
factors in the good things to come and not what is already in
place currently. Therefore, many investors, especially the
newer ones, will be very insecure and will take their
profits before those who believe in Orbital's future as I do.
Mohan, also note that on a yearly basis, the company has
continued to dilute the stock for what ever reason. It seems
that every year, the company has a few million more shares that
the previous year. Some of it is due to aquisitions of
smaller companies, some from employee exercised stock options,
some to raise money for internal reasons, etc...
Most of the reason for the dilution is good, but until some
solid revenue starts actually pouring in to offset this, the
stock may show some volatility.
Someday when the satellite services are in place, Orbital
will not only make rockets, GPS, and satellites, but they
will become more like a utility company collecting SOLID
REVENUE on a monthly basis from various subscribers to their
systems in place. This does not exist today, not really, YET!! |
