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Technology Stocks : Loral Space & Communications
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To: Valueman who wrote (5630)3/28/1999 9:54:00 AM
From: RMiethe  Read Replies (2) of 10852
 
On your response to my outlook on what happened at Loral and how much blame goes to Bernard Schwartz:

Skynet's November 1997 projections for 1998 were based on a launch of Telstar 6&7 by late summer of 1998. Launch blow-ups in 1998 and the Hughes satellite fiascos of the summer caused quality control induced launch reschedules. As I look at it, the delays caused Skynet some $45 million in reduced revenues for 1998.

Orion 1 was to have an extensive revenue producing VSAT business. Most of that VSAT growth was to come from SE Asia, not Europe. The economic collapse of SE Asia ended that. Orion 1 had to go look for new business as a result. That accounts for the very serious Orion 1 shortfall in relation to the November 1997 estimates.

The Orion F3 was originally supposed to be launched in very early October of 1998. Business was to start November 1998. But the Hughes satellite fiascos of 1998 caused that GEOsat to be quality control delayed till April 1999 or so. That accounts for a further variance from the November 1997 numbers to which you referred.

The Loral shortfall, as I mentioned, was not exclusive to Loral. It was also a PanAmSat event, as well as a problem for other satellite companies. When the countries which drive your growth are in economic straights, you have to be ready for the downturn. When a competitor makes faulty satellites, and when launch providers become delinquent, you have to expect investor disinterest. You seem to be talking about the November 1997 "overpromise" from Loral as a specific Loral phenomenon. The industry economic downturn and mishaps is what puts the Loral November 1997 projections in their context.

This is why I stated Bernard Schwartz is not to blame for what occurred at Loral relative to his November 1997 projections.

As for the launch of Globalstar and your comment that Loral had no "back-up" plan. Here is the dateline:

The Zenit 2 failure occurred September 9th, 1998.

On September 16th Starsem reports that the Soyuz Ikar will launch 4 Globalstar LEOS in early 3rd week of November 1998.

On September 27th 1998 the US State Department issues a requirement to Space Systems Loral for a Technology Safeguard Agreement.

The requirement for that TSA set back all launch preparations for Globalstar. Schwartz's donations to the Democratic Party-- the "quid pro quo"-- gets him this.

Your comment that there was no Globalstar back-up launch plan is simply incorrect. The facts do not support it. Given the company's repeated assertions of a launch back-up plan, if I thought the company statement was at variance with the facts I would not own its shares.
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