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Technology Stocks : Loral Space & Communications -- Ignore unavailable to you. Want to Upgrade?

To: Selectric II who wrote (8231)	8/5/2000 10:46:45 AM
From: Rocket Scientist	Read Replies (1) \| Respond to of 10852

Well, I don't buy the "conspiracy theories" about the SPs deliberately scuttling G* so they can pick up the pieces cheap later; mainly because SPs where G/Loral have large, if not controlling interests (Brazil, Russia, Mexico) are doing no better than the others. There's no question that G has not met expectations of sales...by a large margin. BLS himself said in the last cc that G* was about six months behind plan. I guess that's about right: if we'd had 13K subs and 1M+ MoU by 12/31/99 I think most investors would have felt pretty good. In May99, the company projected EBITDA b/e (about 250K subs, I believe) by Q2 2000. Well, we missed that by nearly 240K... whoops. But that assumed limited start of service in Q3'99, and 16 GWs on line by end of Q4'99. What really happened? Very limited start of service in Q1'00; 11 GWs on line by end of Q1 (several in the least interesting markets, like S. Korea and W. Europe); it was only by the end of Q2, that we had 16 GWs in commercial operation. So, what can we expect going forward? Will we add 240K subs in the next six months, keeping us only "six months" behind plan? Can we expect 1M subs 12 months from now, six months later than BLS's 10/99 forecast? I admit it seems very unlikely. Even now, our best three markets in the long term (China, Russia and Brazil) don't have nationwide service; we continue to be stalled in Southern Africa, the mid East Gateways are late, still no SPs in S. Asia.... But the value proposition offered by G* has improved immensely in the last six months: hand set prices cut nearly in half, MoUs by 25% or more, at the same time the coverage maps and roaming capabilities have steadily expanded. By the end of the year, anyway, data capabilities should be offered. Within weeks, if GUSA is to be believed, its customers will be able to roam to nearly all of Latin America and the Caribbean, all of Europe and Australia. There are signs its ad campaign is picking up...more and more posts reporting radio and newspaper ads. I think the SPs properly regard the marketing of G as a marathon, not a sprint. I can understand a certain measured approach to the market, especially in light of Iridium's flare out. And I'm sure the SPs have complaints of their own against G: the phased "roll out" of service is very costly and tedious to explain to retailers; and every forecasted schedule has been missed. Small wonder, if some distributors have been saying to themselves, well, I'll just wait six months (or a year) and see if G has its act together by then before I bend my pick trying to sell their service. So, will G* "get its act together" in time? Remains to be seen, but I'm still hopeful. The opening in Russia is a huge milestone, imo, and the SP there seems to have decent distribution channels set up and fairly rational pricing. In North America, there are frequent signs of progress. Elsacom, in its small market, seems to be trying hard. China is an enigma, unfortunately, as are, less understandably, TESAMs territories. All that said, with the current stock price, I continue to believe the risk/reward ratio strongly favors the longs....