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Technology Stocks : Orbital science (ORB) -- Ignore unavailable to you. Want to Upgrade?

To: deeno who wrote (2187)	8/4/1999 5:07:00 PM
From: Fred Levine	Read Replies (1) \| Respond to of 2394

Not so good news... Wednesday August 4, 1:23 am Eastern Time Satellite Makers Lose Money Overseas By MICHAEL WHITE AP Business Writer LOS ANGELES (AP) -- American satellite manufacturers are losing millions of dollars in sales and finding it tough to do business even with ally nations as a result of tighter export controls imposed in the wake of souring U.S.-China relations. American companies have lost about $500 million so far, and could lose as much as $8 billion over the next five years if the government bans commercial satellite sales to China, according to the Washington-based Satellite Industry Association. Industry officials complain the crackdown on technology exports is creating a licensing logjam that is making foreign companies hesitant to hire U.S. corporations to build new satellites. ``The hysteria over the Chinese situation has painted everybody with the same brush,' said Douglas Heydon, president of Ariane Space Inc., the U.S. subsidiary of the European space consortium Arianespace S.A. ``A lot of non-U.S. customers are saying it's becoming too difficult to deal with U.S. manufacturers and they're seriously considering not doing it any more.' So far, the brunt of losses has been born by Hughes Electronics. In March, the company withdrew from a $450 million contract to build a mobile telephone satellite for a consortium of Asian countries, including China. Hughes withdrew, its satellite half-finished, after the State Department said the deal could benefit the Chinese military. Hughes is under investigation along with Loral Corp. by the Justice Department for allegedly helping China improve its ballistic missiles. The slowdown follows a series of damaging blows to U.S.-China relations, including the Hughes-Loral investigation, the Democratic fund-raising scandal and congressional findings that Chinese spies have systematically stolen American nuclear weapons technology. In large measure, the industry has itself to blame for its problems, said U.S. Rep. Dana Rohrabacher, R-Calif., a proponent of stricter controls on China trade. ``If this industry's going to lose billions of dollars in business with China, they can thank Hughes and Loral Corp.,' he said. ``I have no doubt they made some very wrong decisions that put this country at risk.' Both companies contend they complied fully with export regulations, and no information was transferred that would affect U.S. security. The slowdown started in March, when responsibility for reviewing commercial satellite exports was shifted from the Commerce Department to the State Department's Office of Defense Trade Controls. The State Department is stricter and has fewer people to do the job. Nineteen people are responsible for reviewing some 45,000 export applications annually. Hughes' satellite business remains strong with $4 billion in back orders, but the lost China business forced the company to report a $92 million loss in the second quarter. ``Anytime you lose a contract, it's important,' said Hughes spokesman Richard Dore. ``Obviously, you have projections and you want your revenue streams to continue.' Loral faces a potential $136 million loss if it can't reverse the suspension of a license to deliver an already completed Chinese telecommunications satellite. Hughes and Loral aren't the only companies to be affected. Since March, Orbital Sciences, of Dulles, Va., hasn't been able to exchange technical information with its Canadian subsidiary, MacDonald-Detweiler, about a $160 million project to build a satellite for the Canadian Space Agency. The agency has hinted publicly it may drop Orbital for a non-U.S. company. Several Ariane projects also have been slowed because American companies are reluctant to share information with European customers, Heydon said. Last month the House passed a bill, sponsored by Rohrabacher, that would ease restrictions on exports to ally nations while keeping tough scrutiny on China. The bill has been sent to the Senate, where its prospects are uncertain, Rohrabacher said. In the meantime, U.S. companies are standing on the sidelines as China solicits bids for new communication satellites. Competitors likely to pick up the slack include Germany's DaimlerChrysler AG [NYSE:DAJ - news], French companies Alcatel (NYSE:ALA - news) SA and Aerospatiale Matra SA and Japan's Mitsubishi. American companies don't believe they can get licenses in time to meet China's deadlines, said Clay Mowry, executive director of the Satellite Industry Association. ``We've been told the intention (of tighter controls) was not to stop selling satellites to China, but to deal with national security issues involved in the launch,' he said. ``We hope that's true. What you do is end up giving the market to other suppliers and not denying anyone communications ability.' My own view is that we simply shoot ourselves in the foot whenever we restrict trade. The Germans and the Japanese ( and certainly the French) get rich from our righteousness. fred