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Technology Stocks : Primestar/TCI Satellite (TSATA)
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To: Ray who wrote (86)9/29/1998 12:46:00 PM
From: JDCFA  Read Replies (2) of 442
 
Trading action has been terrible since DJII made lows under 7500. I have contacted all the largest stockholders seeking status. Everyone I speak with is holding, noone is buying. Why? Because trading suggests there's a problem with this deal. Things to bear in mind:
1- TSATA was a spin-off from TCOMA. Some large holders never took to the satellite story, and are liquidating positions to raise capital for possible redemptions. ie hold large cap, sell small cap.
2- Cable co.'s were not happy about $6/sh. With TSATA at 3 I don't think that's a problem any more.
3- Large bondholders may be hedging by shorting stock.

Basically, what limited research there is has missed the point with this story. Staying at Med. power means selling existing assets for approx. $575mm + and wiping out a like amount of debt and finally focusing on growing subs. High power so far has caused this co. to lose focus of what it has. Med. power using a leased GE Satellite is a profitable business. Noone can offer a better price to potential subs.
TSATA can sell its existing customer base for between 6 and 9/sh. MED PWR SUBS are up 15% ytd. Not bad for a company who has only just now really focused on sub. growth. ASKYB = major distraction to Primestar and the street.

MESSAGE FROM THE LARGEST SHAREHOLDERS: KEEP THE FAITH. DOJ and HIGH POWER ARE GOING to dominate short term trading. After a few months go by focus will shift to value of existing business. THIS ONE REQUIRES MORE IMAGINATION THAN ANALYSTS HAVE. From this point we'll end up winners whatever the outcome.
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