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Technology Stocks : CDRD (CD Radio)
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To: John Gault who wrote (722)6/3/1998 5:39:00 PM
From: Q.  Read Replies (1) of 904
 
the Reuters story on the Lehman report said

<<The analysts reiterated their 1-Buy rating and noted they
expect CD Radio to earn $2.89 per share this year and $3.98 in199.>>

I haven't been following this company for quite a long time, and this is my first look at it again. Can anybody explain to me why Lehman says they will make money when they haven't started operations? I don't get this.

The full Reuters story appears below:

NEW YORK, June 3 (Reuters) - CD Radio Inc. stock advanced
Wednesday morning after Lehman analysts Tim Wallace and Bob
Ruland raised their year-end price target for the stock to $66
from $45 to reflect the company's plans announced last week to
double channel capacity to 100 channels by launching a third
satellite.
At mid-day, the stock was still up 2-1/4 to 36 after
trading as high as 37.
The analysts reiterated their 1-Buy rating and noted they
expect CD Radio to earn $2.89 per share this year and $3.98 in
199.
They said "Our fifth year penetration estimate goes to 5.9
percent from 3.8 percent, adding: "We think this estimate is
conservative since it is 50 percent below forecasts by the
Yankee Group.
The Lehman analysts said "We are estimating incremental
capex for the third satellite and expanded service at $290
million and anticipate service beginning in (the second quarter
of 2000) rather than (1999's fourth quarter). Our model assumes
debt financing."
nyc.equities.newsroom@reuters.com))
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