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To: djane who wrote (9146)	1/4/2000 1:33:00 AM
From: djane	Read Replies (2) \| Respond to of 29987

forbes.com. Satellites set to rise further January 03, 2000 One Week View Satellites set to rise further By Charles Dubow NEW YORK. 4:15 PM EST-Satellites got a lot of bad press in the wake of the Iridium debacle. After a disastrous launch, the global satellite phone company finally sought chapter 11 protection in August and was delisted on Nasdaq in November. But the negative coverage of Iridium may have overshadowed a brighter truth: Satellites were among the most profitable sectors of 1999 and should continue to see strong stock-market gains this year, according to William Kidd, satellite analyst at C.E. Unterberg, Towbin. "Satellites were a valuable part of any portfolio, returning an impressive 133% in 1999 and handily beating the broader market indices," Kidd said. "Despite misconceptions of the contrary, in 1999, satellites were not defined as just DBS [digital broadcast satellite]. Eleven different satellite companies--roughly equivalent to half of the sector--had shares that posted over 100% gain." Leading the way in 1999 with shareholder returns in excess of 100% were DBS satellite television providers EchoStar (nasdaq: DISH), Hughes Electronics (nyse: GMH) and Pegasus (nasdaq: PGTV). The reason behind this boost was new legislation in November that allowed satellite TV providers to offer their services in local market for the first time. Other big winners with 100% plus gains were satellite radio operators XM Satellite Radio (nasdaq: XMSR) and Sirius Satellite Radio (nasdaq: CDRD), which recently announced exclusive contracts to provide receivers in General Motors (nyse: GM) and Ford (nyse: F) respectively. "This will be a very hot sector," said Kidd, who believes that Sirius in particular is an impressive opportunity. "Expect all the automakers to start signing deals with satellite radio providers." Broadband is becoming increasingly important to the satellite industry as well. The speed with which cable and digital subscriber line providers have rolled out broadband has alerted both DBS companies and enterprise-oriented, very small aperture terminal companies (VSAT) like Gilat (nasdaq: GILTF) to the potential of full two-way interactivity. The drawback is that existing satellite technology is not advanced enough to provide interactivity cheaply enough to attract a meaningful residential market. The advantage, however, is that most of the customers, both residential and commercial, who would use satellite broadband in the first place live in areas that cable and DSL companies either don't or can't reach. For that reason another interesting sector in the satellite industry will be satellite Internet service providers. Major players like Loral (nyse: LOR), PanAmSat (nasdaq: SPOT) and Cable & Wireless (nyse: CWZ) will be able to bring Internet connections to rural parts of the U.S. as well as parts of Europe, South America, Asia and Africa. While the costs of these ISPs will be more expensive than terrestrial providers in the U.S., there will be no other alternative for customers who need Internet connectivity. Kidd, however, is not bullish on the entire sector. He foresees a strong year for satellite television, satellite radio and VSATs. He is less optimistic about satellite telephony and those companies whose projects are still underfunded. "Funding will create a dichotomy between those companies with money and those [without], and closing the gap after Iridium will be harder than ever," said Kidd. Nevertheless, he believes that "satellites represent a valuable nascent commercial technology that is still making inroads. Consequently, we believe the sector is likely to continue to warrant shareholder returns in excess of those found in more mature equity sectors." top This story was published by Forbes Digital Tool (www.forbes.com) on January 03, 2000. forbes.com ¸ 1998 Forbes Inc. Terms, Conditions and Notices